Speculation around a larger iPad won't go away. The biggest rumored feature of the 'iPad Pro' is its 12.9" display. The device will also reportedly have superior display resolution, higher internal specs, and perhaps an exclusive split-screen mode. Perhaps there's fire near this smoke, perhaps not. Regardless, what does the market for such a device look like? Studies have shown that tablets are primarily bought by consumers (as opposed to enterprises) and used as media consumption devices to watch video, play games, read books, view photos, etc, as well as for email, social networking, and web browsing. Although portable in nature, tablets are primarily used in the home, in contrast to smartphones.
This is only anecdotal evidence, but I've noticed some people are using a tablet instead of a TV. Children are using them to watch Netflix and YouTube in their rooms or the back of the car. I also know some couples that use a tablet along with the TV to watch two different programs at the same time, even though they are both in the same living room. A larger tablet could be useful to these types of users. It might also be valued for video gaming, drawing, and other creative applications that could take advantage of the larger screen size.
However, roughly half of all tablets sold are under 8". This is partially driven by the lower price points of the iPad Mini and several quality small Android tablets, such as the Nexus 7. Personally, I prefer a smaller tablet that is easy to hold in one hand for reading, and this may be a driver as well.
So, could a big iPad bring new users to the tablet category and spur sales, or is it just a small segment that some existing users will upgrade to? I'm leaning towards the latter. I think it will be a nice product that some users will find valuable, but most purchases will be from replacements, not new tablet users. If and when it is unveiled, the announcement may shed some light on Apple's thinking. Perhaps the iPad Pro will be all about enterprise productivity, which likely has more potential to greatly expand the category.