The Sims app works on the iPad, but there could be another app developed for the iPad as well.
As for the Mall, it wouldn't be that odd, people carry around laptops (in laptop bags) all the time, you can see them from a mile away. Carrying the iPad would not make you any more of a target, and due to the slimmer size of the iPad, it would be easier to conceal.
I worked in retail at the huge Mall in Nashville for several years and it would have made a handy tool for people, both employees and I imagine some consumers as well. Sure it's not a phone, but so what? I did bring my laptop sometimes to do work - accounting, mostly. If they had the iPad back then, I would have purchased it in a heartbeat. It's small and light enough to carry around, can do more than a smart phone, and is more portable than a laptop, it certainly has it's usefulness. Initially, I thought the primary market for the iPad would be maintenance workers, who usually have to carry a laptop around everywhere they go, the iPad would make for a great tool to use on calls. But now I think that it's usefulness will actually be in the consumer market as well.
When planning a building project, I usually carry a pad and pencil around the Home Improvement store to jot down what I need, and try and compare prices, etc. I could see the iPad being really useful for such circumstances, I certainly wish I had previously owned something like that before. It could have come in really handy. You might not get it for that reason alone (unless you're a contractor), but it would be one of the many useful aspects of the device. I’d be much more likely to read a book or newspaper on the iPad than I would the physical book. Weird? Perhaps.
Since the release of both the iPod and the iPhone, that Apple department seems to have a knack for finding a completely unexplored market, and I have a feeling they are going to prove a lot of people wrong again by finding a previously unseen market for the iPad. After trying one myself, I think that is very likely.
Now if the price could only come down a bit... like the iPhone, it probably will.