Steve revealed at D10 that the iPad actually did get prototyped first. IIRC, he tasked a team with creating a keyless keyboard tablet thing (forgive my terrible paraphrasing). They came back with a tablet. When Steve scrolled up and saw the rubber band effect, he said "oh my god we can make a phone with this" and they went the phone first.
Edit: Below is the interview. He "had an idea of being able to type on a multi touch glass display"