I'll post this here.
I see todays phones as miniature tablets, and its not hard to see why (eg/ Grid 10 vs Grid 4).

I'd place the tablets into 3 categories; pocketables, portable, and spacious.
It seems better to name them as Phones, Pads, and Tablets.

Pocketables are basically phones that are less than 5.0 inches. It'll give you a decent amount of screen-estate (3.7" 4.0" 4.3" 4.5") but be limited in many ways. The maximum size for comfortable touchtyping and a bearable bulk/heft seems to be roughly 4.5 inches for most people.

Portables are pads (think of a little notepad) which give you more screen-size and can do several things better/easier. But the experience isn't too different than a phone/pocketable. They aren't pocketable, but still extremely portable in purses, coat pockets, wide-rear pockets, car-docks etc. This is where the 6.5" to 7.5" size comes into factor. Any device that is more than 4.5" but less than 6.5" generally is wasting screen space because its not pocketable but rather portable however the screen size isn't large enough to offer much of a different experience.

Spacious tablets are real tablets (think of a large heavy book) which are supposed to displace your netbook and laptop you "lug" around for leisure and work. The large screen gives them the chance to offer a completely different experience to pocketable phones, a good thing, but still resembles the portable pads. So far they are appalling in displacing ultraportables for work-related activities, but this can change in the future (Windows 8, better QNX/Android/iOS). These are devices with 9.0" to 11.0" size and are meant to be carried under your armpit, or in your backpack/suitcase. So they are more portable than laptops/netbooks but not portable enough to be carried in different means. Any tablets that are sized 7.5" to 8.5" generally seems like a waste because its not portable in purses/large pockets or dockable, and still lack the larger screen for a differed experience.

Side note, people with large hands/fingers (me) and a spacious car dock may be in luck as an 8.5-8.9" tablet with shaved bezel might still be "portable" (not lugged) and give you ample screen estate to have a (spacious) "tablet" user interface rather than a (portable) "pad" user interface to really offer a distinction to your large handheld/pocketable phone. I've come to term this as a Padlet.

EVERYTHING comes down to your needs. If you need the extra screen for a more desktop-like internet browsing than a tablet is a must, if you cannot bare lugging around a laptop sized device than a pad is more convincing. If you are gifted and want the best of both worlds, then a padlet may be your thing.