The improved scaling is a good thing.
Istanbul at least pushes AMD's 4-socket products out of the embarassing situation of being outclassed by dual-socket Nehalem.
Perhaps with 6 cores, the chip will also return to the square shape of Barcelona, as Shanghai is pretty rectangular.
The chip is going to be bigger, and we'll have to see how AMD manages with another big chip, and how well it can clock with two extra full cores.
What does this mean for Shanghai?
That chip is significantly less compelling with Istanbul for a lot of workloads (particularly with the refusal to add the snoop filter to Shanghai), so this will segment AMD's product lineup with negative consequences for the smaller but higher volume chip.
There's always Phenom to take up the slack.