Nexus 1 Anyone?
1.5 inches, eh? It is only a matter of time. Smartwatches will go mainstream. But if all you do on the smartwatch is read more of Twitter and Facebook, then that's not appealing. A smartwatch has got to be smarter than that.
Rumor: Apple Building Bluetooth Smart Watch
In-built health monitoring would be a good one. A health assistant who literally never leaves you.
If the smartwatch is too good will it have battery issues? Could you make phone calls? Should you be able to?
A smartphone you keep with you almost always. The smartwatch should not compete. Or the smartwatch should be able to know if your smartphone is around. If it is around the smartwatch leaves most of the action to the smartphone. But if your smartphone is not around, the smartwatch becomes more alive, takes up more of the functions, upto and including making phone calls. Or what?
The smartwatch talking to your other devices would be the best part.
The Smartphone In Five Years
Siri on the smartwatch would be nice.
The smartwatch would be a great input device for your other devices. But output and display should be left to your phone and tablet if they are around.