If screen size is the key to creating a satisfactory "magazine" experience on a handheld digital device (hdd), something the size of a Kindle should be better than an iPhone – and something more like a sheet of A4 better again. This is what Hearst, the American publisher of magazines and newspapers, seems to be hoping, according to various reports (well summarised on this post from CNet).
Implementing a tied-in device could also give Hearst the opportunity to try an iTunes like subscription service, and such a service could be extended to include other publishers, thus creating the Amazon-style service proposed in previous posts.
Fortune magazine's first report of the Hearst hdd
The Wall Street Journal on Hearst's plans to charge for content