Apple May Meet Tablet Competition With a Smaller iPad - NYTimes.com

Perhaps Apple will leave the display resolution unchanged from the original iPad size, to keep things simple for app/content developers, and call it the new iPad Squint

"But Apple is hardly about to cede ground.
The company is developing a new tablet with a 7.85-inch screen that is likely to sell for significantly less than the latest $499 iPad, with its 9.7-inch display, according to several people with knowledge of the project who declined to be named discussing confidential plans. The product is expected to be announced this year."

Apple May Meet Tablet Competition With a Smaller iPad - NYTimes.com