The 7-inch iPad has been rumored for a while now. A new rumor says that the release of the iPad mini is in October. The price would be under $250. The $399 iPad 2 is already said to have killed off the Amazon Kindle Fire sales. A $250 iPad kills all low-end tablets.
Apple is set to take over the complete tablet market in October with the release of a 7-inch iPad priced between $200 and $250 reports iMore. iMore's source claims that Apple's aim with the aggressive pricing is to leave no space for competitors.
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The 7-inch iPad is supposed to be identical to the current new iPad, just smaller. The resolution is also supposed to stay the same with 2048x1536. This would give the iPad mini the about the same pixel density as the iPhone 4S.
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The screen-size of the small iPad is most likely 7.85-inch. This size has been rumored the most so far.