Yep. This.
If they're working in a watch, it's a much more iterative step towards wearable computing than glasses. You can "escape" a watch or a smartphone if you wish... it's not quite as simple with an interface that's an inch away from your eye. If it becomes a battle between Google Glass vs iWatch, I suspect iWatch will win.
I hope not. A watch would have the same limitations that all our current devices have.