An Apple Watch with a small screen is a misfire and a watch that works standalone is somewhat missing the point. Watches were supposed to be remote control devices for our phones. Nothing else. This move feels like a cheap limited feature phone, not the future.
Edit: Maybe I am missing the point. Imagine a standalone watch that broadcasts wifi signal. Now imagine a thin ipod touch on the other hand piggybacking on the watch. That would be like reimagining the future.