The 12" iBook existed long before the 14" one was added to the product lineup. I expect that the addition of a larger Mac Book screen could be a possibility in the future, but maybe it's not ready now (or Apple isn't sure it would sell). Honestly, I never understood the 14". Less portable, but the same resolution. If the larger screen were actually a higher resolution, it would make more sense. But maybe for older eyes it's a plus, I dunno.
As for the loss of the 12" PowerBook/Mac Book Pro, I would be a bit dismayed with that. I'm a very happy 12" PowerBook user, and I would hate to have to upgrade to a 15" MBP (again, less portable) or potentially downgrade to a MB when I get a new machine in a year or so. Admittedly, the PowerBook is a dressed up iBook anyway, but I like the Aluminum and the keyboard better. And DVI out and display spanning are a must (I know about the hack, but still). If the 12" PowerBook is not replaced in the Mac Book Pro lineup, I hope Apple at least puts DVI out and display spanning in the MB. (The precedent for this has sort of been set with the Intel iMac, so I am hopeful. I do realize that "precedent" is not a sure sign, though.)