The problem seems to be with the iPad's built-in Wi-Fi, which will disrupt the signals of other devices that use different standards.
"If you operate equipment in a frequency band which is different from the others that operate on that frequency band, then there will be interference," says Nati Schubert, a senior deputy director for the Israeli Communications Ministry. "We don't care where people buy their equipment. ... But without regulation, you would have chaos."
In the U.S., devices with built-in Wi-Fi have the capability to broadcast at higher power levels than are allowed by "European standards."
While consumers and tourists alike have complained about the ban, some developers were able to get the device imported before the ban and will use it to develop apps.
"There are several hundred people in Israel who make their livelihood developing apps ... and there are going to be companies that suffer, because they can't deliver the services they're supposed to be delivering," adds an anonymous developer with an iPad in Israel (via the AP)