If you're talking about something like the Asus Transformer, then what I find a fault is the ability to type on glass vise an actual keyboard. You may find a Transformer for $400, but to get the keyboard and base is another $120 or so. I'm not sure if you can even get a keyboard with a Motorola Xoom, but you're also looking at $500 right out of the gate for something that I really think feels very cheap in your hands.
At $400, I'd stick to tradition with the traditional family members. A 15" notebook with a camera and long battery life can be right in that range not be neutered one bit in order to become a Tablet. 15", realistic HDD capacity, a keyboard, probably a DVD drive, Wifi...just sounds like something they'd feel comfortable with on a daily basis.
I was actually thinking about the Samsung chromebook. The WiFi-only version just dropped in price to $350.
Does that change your opinion on the matter?