Based on reading the rumors, reviewing the iOS 8 developer's documentation, and gut feeling, here are some predictions.
There have been rumors of this for a long time, but it's fairly certain that tomorrow's the day. Gruber has essentially confirmed it, Ive is supposedly joking about how Switzerland is in trouble, and Apple built a ginormous new structure in Cupertino just for the announcement.
I expect this thing to have the build quality, design quality, and general workmanship of a $1000 watch, and to be priced starting at around $400. Apple can afford to charge less than Tag Heuer because the innards will cost less, it can trade volume for the "conspicuous consumption" tax, it can use cheaper labor, and it owns or controls massive parts of its supply chain. It can't afford to charge too much because unlike a nice watch that you might expect to own forever and pass down to your kids, any smartwatch will eventually (i.e. in two or three years) be obsoleted and become not very desirable to any but the most fevered collectors.
I expect the watch to have a Touch ID functionality, under the screen (I believe it will use a normal strap that can be replaced, and none of the device's smarts or battery will be in the strap). I believe it will have a battery life of at least 24 hours, possibly 48. The crystal will be sapphire, like any good watch. The back side will feature sensors for various health relating things, including at least pulse. It will have NFC both for use as when making payments and for use as a token with other Apple devices. For example, your Mac will be able to tell when you've gone away, and lock the screen. Or that you left your iPhone in the restaurant. You will be able to use it as a key to unlock devices (maybe only as a secondary factor, in addition to password or Touch ID).
It will be able to pair with an iPhone for use with Health Kit, and to use the iPhone's data connection. The new "auto hot spot" stuff in Yosemite is an indication of how some of this may work. Much like you can set up a new Apple TV by tapping it with an iPhone, you'll be able to do the same with the watch; you won't have to manually type in anything using an awkward built-in keyboard. This may work even without NFC-equipped iPhones, the same way it does with Apple TV. (Some combination of Bonjour, Bluetooth LE, and magic). Very little data will be stored on the watch itself, but it will be able to use the iPhone's network connection to pulldown iCloud data, and can access information from the iPhone itself (like music, photos, etc.) (hence a good time for Apple to increase the size of the iPhone's maximum flash memory to 128GB).
It will support Siri as its primary input method, but you'll be able to control it using your iPhone or other Apple device when need be.
It will support third-party apps, and will report itself using the new idiom system as being small in both dimensions (or extra small).
It will have no ports - no wires plug into this thing. It will charge by induction (unless I'm wrong about the strap, in which case there will be some sort of Lightning connector via the strap. Maybe as a backup for when you're on the road and don't want to bring an inductive charger).
There will be a Mickey Mouse watch face.
It will not have a camera (unless just for FaceTime, but I doubt even that).
It will look really nice.
It will be liquid metal.
It will be liquid metal.
In four years everyone will pretend that this is how Google Gear-based watches operated and looked today.
Not much to add here other than I doubt the larger phone will be called the "iPhone 6+" and I think the device will use the barometer primarily for calculating how many flights of stairs you climb each day and for indoor navigation purposes.
[Update: I like to make predictions]
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