Will the popularity of the Nexus 7 hurt tablet app development?

Josh has mentioned on numerous occasions that apps not yet adapted to tablet use, like Twitter, are still very useable on the 7" Nexus 7. Whilst I hope this release will encourage developers to work on scalable apps (like Pocket and G+), do you think this will hurt development for tablet specific apps?

Without a hugely popular 10+ inch Android tablet, I'm personally getting worried that we may never see iPad-like quality apps for android tablets even though the software and recent hardware is perfectly capable of running them. Is a device 2-3 inches larger than current phones enough for developers to differentiate the available functions in their apps?

Regardless of 7" being a better platform for a subsidised tablet, would it have been better for the Android ecosystem as a whole had Google released a flagship device with a larger screen?