I think the popularity of games/entertainment/killing time apps on the iPad is more a reflection of the popularity of those tasks on personal computers in general. For most people this is all they do with a laptop at home, and it's not infrequently a part of what they do at work, too.
There are people who feel the iPad does each of those things inadequately (as with productivity apps), but the point is to demonstrate that it can do those things, whether you do or not. To show that it's not (say) a web-browsing device that can't game or a media player that can't browse the web or an e-reader that can't edit HD video. It can't do everything for everybody, but I think they're trying to expand the capabilities into doing almost everything for almost anybody (as a PC does) rather than seeking a sweet spot.
There are people who feel the iPad does each of those things inadequately (as with productivity apps), but the point is to demonstrate that it can do those things, whether you do or not. To show that it's not (say) a web-browsing device that can't game or a media player that can't browse the web or an e-reader that can't edit HD video. It can't do everything for everybody, but I think they're trying to expand the capabilities into doing almost everything for almost anybody (as a PC does) rather than seeking a sweet spot.