Seems like Apple is moving away from the home button. Not sure how I feel about it, but at least it'll let my 3 year old focus a little better on the app I want him to play rather than him constantly hitting the home button and going to Shrek Kart.
Color me doubtful, though I'd love to be proven wrong. Lots of devices already do a good job with gesture-only interaction, but it requires redefining large chunks of the iOS vocabulary.
The iPad already supports gestures. Three gestures replace all you need the home button for (one or two small and insignificant exceptions, but those would be easy enough to add).
Those gestures already declutter the interaction considerably. They make for a much smoother experience than that clusterfuck which is the home button.
It’s a nice fallback, so I’m not sure whether it’s a good idea to remove it, but I haven’t touched it in ages (it’s always not where I expect it to be, anyway).
I love the system Apple is building. The gestures built into iOS 5 make it faster and easier for me to use everyday. But gestures are like keyboard shortcuts - they require instruction and they're not discoverable. I think having a so-called "Panic" button exist on the device is important for the way it functions for consumers (not to mention integral to Siri's interface if that makes its way to the iPad). Will it be a physical button? Maybe, maybe not. Removing the only physical button on the device requires a more fundamental change than "three gestures replace all you need the home button for" though.
I never considered the home button a problem until I saw him using the iPad. Fascinating really.