There's been talk of an iPad mini for a long time. A quick search shows links as far back as August 2010 in the 'bread. Now, though, the Wall Street Journal has thrown its weight behind the rumors and speculation, giving them a sudden surge in credibility.
According to the Journal, "people familiar with the situation" claim Apple is "qualifying suppliers" for a new tablet with a display size of eight inches or so. One of the Journal's sources claims the device has a 1024x768 display resolution, but that's it as far as specifics are concerned. The story only adds that Apple tests new designs on a regular basis and "could opt not to proceed with the device."
Last October, DigiTimes quoted nebulous supply chain sources who made a similar claim: Apple has a 7.85" iPad in the works. At the time, the site said production would kick off in the second quarter of this year.
I said it then, and I'll say it again: this doesn't sound like something Apple would or should do. Even if the device ends up with a 1024x768 panel and avoids fragmenting its iOS ecosystem with yet another target resolution, the user experience will suffer because of the smaller user-interface widgets. Steve Jobs, too, was skeptical about the benefits of smaller tablets. He stated back in October 2010, "The reason we [won't] make a 7-inch tablet isn't because we don't want to hit that price point, it's because we think the screen is too small to express the software."