We still can remember, Steve Jobs hated 7.85-inch size pad, but you know what, someone find that thing in the Apple's lab that runs 1024x768, says Daring Fireball's John Gruber in episode #86 of The Talk Show.
Host Dan Benjamin asked Gruber, "Is Apple going to come out with a 7-inch iPad, and if not, why not?"
To which Gruber responded: "Well, I don't know. What I do know is that they [Apple] have one in the lab…a 7.85-inch iPad that runs at 1024×768. It's just like the 9.7-inch iPad shrunk down a little bit," Gruber said. "Apps wouldn't need to be recompiled or redesigned to work optimally on it. It's just the iPad is smaller."
"I've heard from numerous people that it's one of the ideas that they're noodling with."
There have been numerous reports of late predicting the release of a smaller iPad this year which would allow Apple to compete with lower price devices; however, Gruber notes that "I have no idea, I've heard from nobody that there is any kind of time frame for when they might ship it, if it's something they want to ship. I think it's something, it's like a maybe, you know and as Steve Jobs' has said famously, numerous times, that he's as proud of the things they've said no to much more than the things they've actually shipped."