iPad is a new product line and need to reach mass appeal. Apple is betting a lot on a form factor that has repeatedly failed. They need to sell a high volume of units, not sell a few high end units.
Maybe in a few years there will be an 'iPad Pro' with a higher power processor, better screen, etc. But it seems unlikely in the short term.
Also a retina display on an iPad priced at 1000$ or so would probably have similar profit to the current iPads. So even less motivation.
I agree with all of the above and add that Apple's only plausible competition is from _below_ (e.g. the Kindle Fire) and so if anything they're probably figuring out a plan for what to do if sales start flagging from such competition (e.g. can Apple maintain margins on a $299 iPad2? $399?).
Whether or not you're right, if Apple is worried about competition from "below," as you put it, it will be the very first time since 1978 that they have done so.
Uh, because people will pay more for it?
I would cheerfully fork over $1000 for an iPad with the resolution of the iPhone 4's display.