I'm not an expert, but isn't the private key memory area of a smart card unrecheable? How would you backup your wallet if it is in a smart card?

For a home use dedicated device, I don't think it needs a smartcard. Just a flash memory, plus wallet encryption with a password should be enough. Actually it's better, since you could easily make backups of this encrypted wallet.

How I see such device:

• Small, but not necessarily pocket-portable
• With a small keyboard
• With inner storage capable of storing the wallet, a light-weight blockchain (headers + blocks in which you have money) and all the software it needs
  
• Capable of password protecting your wallet
• Wallet management and transfers features just like in the bitcoin client
• A camera so the user can read bitcoins addresses or QR codes with btc addresses from anywhere
• Wi-fi used only to connect to the bitcoin network, nothing else
• With a USB port so you can make backups of your wallet somewhere else
• As cheap as possible, meaning monochromatic screen and no unnecessary fancy stuff like touchscreen etc

And as a big bonus, although not that important:

• Embedded anonymisation proxies (Tor, I2P)
• Bio-metric authentication

Such a device would be just wonderful.