Not because people don’t want it… but because they can not afford it.
The more time that passes the more I am believing that Apple has intensions to release a third generation iPad this year, in time for the holidays.
Apple’s mistake that will cannibalize the iPad 2 was, not ignoring (confirming by not confirming) rumors of an iPad 3 in the fall that came out weeks before the iPad 2 was even announced, but rather deciding to sell the original Wi-Fi only 16GB iPad at $399, $100 less than the entry level iPad 2.
Ultimately, I think many people are looking at the original iPad and saying that $399 for the iPad and $149 for an iPod Nano sounds like a better deal than the iPad 2 at $499. So, I am going to predict that from now on, the last generation iPad is the one that is going to sell the most units. I also think that the iPad will slowly lead to the end of the Apple TV because of the $39 HDMI adapter that will be released alongside the iPad 2.