Tablets are in part a replacement for netbooks, but they can also serve different applications and customers. Consequently, they have the potential for expanding the market, not just cannibalization. This is particularly true as unit prices decline and consumers consider these for purpose-specific purchases rather than as a "swiss army knife" purchase.
Notebook computers are small inexpensive laptop computers - their benefits are lower cost and smaller size and the trade-off is the loss of some power and functionality. The iPad (expanding upon the popular iPhone platform) offers positive benefits in terms of accessibility, applications, user interface, rapid start-up, and style - rather than simply offering a defeatured device for a lower cost.
Costs of netbooks and low-priced notebooks are sometimes half that of current tablet computers. And limitations of tablet computers in the areas of word-processing, spreadsheets, etc. seem to differentiate the formats from each other, so I'm surprised that one would have a profound effect on the other. Users that buy netbooks and notebooks for primarily internet-based usage, such as email, web surfing, cloud-based applications might prefer the "touch-screen" interface over the standard keyboard/mouse interface, but I would think that "power users" (those that want fast computing time and running multiple applications at the same time) would not be seem to be very happy with the tablet computer utilization. Would be interested in hearing other opinions...
It is going to be a market where new ones displace old ones. I do not think this is good for the industry where they are cannibalizing their products. It is competition to have new products, but having these products to have short lifespan could put the industry in tough condition on R&D. Many will follow Apple to table and iPad, but it may not mean that many will be successful.