I am no expert in the field,but as far as i know java in embedded devices is mainly for communication puposes.
Companies wanna be able to implement the hottest new protocols like Bluetooth and give internet connectivity to mobile devices like cellphones etc. Connectivity for embedded controllers in other areas to internet is not a bad idea either as it will enable technicians to directly change settings and stuff of field devices from REALLY remote places ... like from home :D

however, one problem i see is the security issues involved. This year at the industrial automation fair at malaysia, 1 company (maybe Siemens or something) had introduced a feature where the entire program of a PLC can be changed over the internet, and my biggest worry was security. How can you ever make such a thing completely secure?

another problem with java (at least on PCs, where I have worked on it) is that it is very slow. Maybe for embedded versions, it will be sped up for real-time applications.and the 16K storage space seems to be optimistic

One potential advantage could however be that a control system hardware can be totally changed or upgraded, but the software/firmware will be the same, assuming platform independency is the same for microcontrollers as it is for PCs. So theoretically a program written for PIC can be used unchanged for x51 in an identical application. I think that may be useful in some scenarios

Kunal