It's also true that former Apple CEO Steve Jobs once said that tablets with screens below 10-inches in size would be DOA. We have never missed an opportunity to remind Apple that the iPad only has a 9.7-inch screen.
Meanwhile, the Motorola Xoom and a number of other Android tablets, such as the Samsung Galaxy Tab 10.1 have 10.1-inch screens. That is, of course, nit-picking.
Rumors about a smaller-sized iPad have been running around for quite some time. Until now, Apple hasn't pushed one out the door, but it's long been believed Apple was working on a smaller tablet. Since the introduction of the Kindle Fire, those rumors have just gone up exponentially.