Back in May, iMore reported that $200 7-inch iPad Mini was coming this October, and now the big mainstream publications like Bloomberg and The Wall Street Journal are repeating those reports. Their sources indicate suppliers are ramping up for production as well.
We still haven't seen the type of hardware leaks for a smaller iPad that we've seen for the iPhone 5), but the consistency of these rumors at least provides a rough idea of what to expect in the medium-term from Apple. There are a lot of great 7-inch tablets out there, and Apple will probably blow them out of the water so long as they're willing to offer a more accessible price point.
Personally, I'm a fan of the size, but I'm not sure it's worth sacrificing a Retina-quality display. How often do you wish your iPad was just a little bit smaller? Is portability really a huge issue, or was Jobs right in saying the 7-inch size is a joke?