Today iMore reports that Apple will definitely be releasing a 7-inch iPad in October of this year, for around $200 to $250. iMore’s sources tell them that it will be priced that low because Apple wants to do the same to the tablet market as it did to the MP3 player market back in 2004, when it expanded the iPod line so much until any other competitors were pretty much squeezed out of existence. What is particularly exciting about this story is that iMore says that according to its sources, the new, smaller iPad will have exactly the same specs as the current iPad. That means it will have a 2048x1536 Retina display. For around $200! iMore says it does not have exact details of the size, but it will be around 7 inches. At that size, iMore speculates that the display should have a pixel density of around 326 ppi, which is the same as the iPhone 4S, and higher than the 264 ppi of the new iPad. iMore says that Apple will be able to keep costs down by reducing storage, so you will get around $8GB for your $200.
I can most definitely see this happening, iMore has a great track record with Apple stories.
Source: 7-inch iPad on track for October 2012 release, $200 to $250 price | iMore