I had a N 900 and now I use a Note 1. I gave up my N900 for Toshiba TG01, but this was an awful experience from my beautiful N900. Being a Toshiba fan (I own a laptop from them as well) when they released the first android tablet I enjoyed the idea of all the bells and whistles, but I realized very fast that 10" was to big for me (while watching the movies I had to make the player screen smaller). I was a bit worried in the beginning about the size, but to be honest I want a bit more but 5.5 is not enough. My ideal size would be 5.8-6" now for the biggest smartphone LOL. Well may be I will get a nexus 7 in the end.
Note is god to replace the smartphone and the tablet as well. i need bigger screen only for 2 page scanned pdf files an a bit of comfort while reading this type of document.
It is not awkward to use it as a phone as well, although I prefer to use headphones.
It is a good size to take it with you everywhere. It has a great developers community. At the moment I use Rocket Rom ics with a bit of jelly bean of flavor (which I love).
From my point of view, if you don't need higher ram and processor the next difference between note 1 and 2 is default jelly bean and for sure future upgrades you can buy as well a Note 1 for a cheaper price and upgrade if you like it to Note 3!