Resolution Smarts by Apple
Check this out.
"What Apple isn't telling people about their reason for using the higher pixel density (that's beyond what average humans can even detect, therefore useless beyond that), is that it has them using screens that are roughly the same density on both iPad and iPhone. So that all Apps can be tweaked to run on all iPlatform devices without needing to be line doubled up to iPad or run a vectoring GPU process down for iPhones and iPods. It's a single platform design then. Smart! ....but not a super break through on it's over 10yr old technology (IPS). They merely shrunk the same die process used in making their old IPS screens. No doubt.... Samsung has been contracted along with LG to supply iPhone 4 screens along with ones for iPad!"
This is brilliant economy of scale in software development. This could also be a major reason Retina @ 331 ppi won't be coming to iPAD2 larger display. It is all about software, and commonality in apps, folks.