We just keep hearing about a 7.85-inch iPad, so maybe there's something to the rumors. As is often the case, today's rumor comes via DigiTimes, the Tainwanese site that often gets its info from Apple's suppliers (and that isn't consistently accurate in its predictions). Today DigiTimes is reporting that the forthcoming iPad-mini will use "thin-film" touch technology for its display. The advantage of this technology is that the new iPad can be thinner and less expensive.
DigiTimes's sources said that Apple is coming out with a smaller iPad option to stay competitive, and that they expect Apple to ship 7-10 million units this year.
I question, though, the rationale provided by their sources -- that Apple is doing this to stay competitive. They're already dominating the market. The only other tablet to see significant sales has been the Kindle Fire, and news reports say that after selling around 4 million leading up to Christmas, sales have dropped markedly in 2012.
But of course I hope they're right that this new tablet is coming. And that the earlier rumor of a price range of $200-250 is also right.
[graphic a mockup from Appolicious]