According to these information leaks, there will be a 7-inch iPad. In fact, the product is already finished. Even more interesting, is that there are at least five different designs built in hopes of keeping people from knowing what the finished product will look like. However, word is that it will somewhat resemble the iPhone 4, rather than the current iPad.
A 7-inch iPad sounds somewhere between what is comfortably slid in your pocket or bag (iPhone and iPod Touch) and what you can rest on your lap for comfortable viewing. It sounds like that awkward spot in between those two points. Though it may be popular for those who are more interested in reading eBooks or gaming with their iPad.