I don't know anything about Ives' business skills, but I'd worry that making him CEO would be promoting him to his level of incompetence. He's a fantastic designer, and I'd rather not see him distracted from that role.
But it might be wise for him to have final approval over product designs, the way Jobs presumably does now.
I think the most probable succession plan is to put Tim Cook in charge of the company with Ive in charge of design and aesthetics. Who has what job title is hard to predict.