Tegra2 has two problems- no NEON, and no reliable playback for most HD (720 or 1080) video. Both are killers. Every other new single or dual core SoC used today have both. Tegra2 was Nvidia's fix, but the chip is way late, and way over engineered (4-cores, when 2-cores are all most OEMs need at the moment, for cost and programming reasons).
Tegra2 was advanced for its time, and still makes for a great tablet, if you don't care about HD video. Tegra3 is going to be advanced for its time too, but a poor fit for the tablets most companies want to build today. By the time companies wish to use Tegra3, better choices will exist from Nvidia's competitors.
Nvidia is out of sync with the market, plain and simple. Also Nvidia, for a company with a killer rep for graphics on the desktop, delivers decidedly average GPU performance on the tablet- a clear embarrassment. Nvidia should have had a Tegra2+, with NEON and better HD decode, selling a year ago. Nvidia bet the bank on TSMC having its new 28nm process ready for 1H2011, and this was a gigantic mistake.
Nvidia's ARM competitors are not bleeding edge, like Intel and AMD are. The ARM SoC marketplace is all about cost, and the right features at the right time. Nvidia is too used to paying shill tech sites to trumpet PR rubbish that hides its shortcomings in the PC space. Who would build a tablet today using Tegra2? No-one, because the video weakness is completely unacceptable in any new tablet, regardless of cost.