Sorry, I'm kinda out of the loop, but what were you guys expecting?
Its not real impressive, but I wouldn't call it fail. A more modern SoC was about all it really needed, and its not like they'd be stuffing a quad core one or anything in there as they'd need 28nm and with TSMC's issues that won't be happening until next year.
The only real fail is that this is what should have been done months ago, and nothing major software wise.
I'm happy that they're continuing to improve the camera. Yeah, I'm not the biggest fan of the kinda slow and hyped way they improve things, but at least they tend to keep at it.
Any word on what they've done with the Touch? If it gets the IPS display and A5 it would be nice. It'd be really good if they'd add cellular data plan like the iPad too, but I'm doubtful Apple will do that, as I think they realize it'd eat into the iPhone sales too much (and carriers wouldn't be that happy about it).