After having tasted quite a bit of success with the original Kindle Fire, Amazon seems to want to go big this time with a new launch of 3 different models: a low-end one with a 1024×600, a mid-end 1280×800 version, and a more high-end one with a 1920×1200 screen. But does Amazon need so many tablet versions in their offering?
I believe the 1024×600 version should be eliminated. All tablets (and high-end smartphones) should have at least an HD resolution from now on. Maybe it would make sense if they make the 1024×600 one $150, for people who are very price sensitive, and the 1280×800 version for $199, like the current Kindle Fire. But if the low-end version is only $30 cheaper, I think they'd be doing themselves a favor to get rid of it, and simplify the offering in the same time, too.
Depending on the final price, the 8.9" version might not be a terrible idea. Personally, I think 7" is a little too small for reading, at least for reading at home. Reading on the go might work better with 7" since it's more portable. Somewhere around 8-9" should be the ideal size when you care about the size of the page more than the portability, while still being small enough to not be too tiresome for your hand. It also offers a higher PPI, by about 40, and only 10 PPI lower than the new iPad, so the text should be sharper as well.
The problem for Amazon might be that I believe this year Android manufacturers will be more prepared to compete with them, and there will be pure Android alternatives with Google's services, that are just as good and for the same price. When you can already get pretty much all Amazon's services already on Android, it will be tough for Amazon to claim some kind of superiority over Android.