I disagree. There is quite a bit of difference between the pocket-sized iPod Touch and the supposed iPad Mini. They are in 2 different categories.
What "makes no sense" is that Apple has historically had multiple products in a particular product line... yet you seem to think the iPad should remain a single size.
Image Laptop - 11" 13" 15"
Image iMac - 21" 27"
Image iPod - Shuffle, Nano, Touch, Classic
Image iPhone - 4, 4S, 5
Image iPad - 7.85" 9.7"
Why does Apple make multiple sizes and models for most of its products... yet it's wrong for them to do the same for the iPad?
You say there is "no advantage" to the iPad Mini over the regular iPad...
So what is the advantage of the 11" Macbook Air over the 13" Macbook Air? Was that a mistake?
Why is it OK for Apple to make a smaller laptop... but it's crazy to make a smaller tablet?
How about this... Apple isn't making a smaller iPad because of threats from the Nexus 7 and Kindle Fire.
Instead... they are
expanding the iPad line like they've done with other products so many times before.
Does that make more sense?