Children with little hands (and petite adults)....
I highly doubt that Apple will play the low-cost game that Google, Amazon, and Nook are playing. The rumor pricing of the iPad mini at $199 to $250 is a pipe dream. Since the iPod Touch is $299/399 (32GB/64GB) and the new 10 inch iPad is $499/599/699 (16/32/64GB) plus $130 for cellular I speculate the iPad mini will be $399/499/599 plus $130 for cellular with the kicker that it comes with a retina display. The iPad 2 could be discontinued to make room for this price point.
Although I'm very surprised that there are no rumors floating around for the iPad 4. Other than a faster processor, there's really nothing else that I can think of to add to the iPad, except maybe make it bigger. Apple, please make a 15" iPad with the MacBookPro retina display. Mod the OS to allow you to run fullscreen or have 2 apps up at once at half screen each.
Two things you need to take into account;
1. The new iPod Touch and iPad Retina are both using very high resolution Retina displays that are not only difficult but expensive to produce.
2. The rumored iPad Mini is speculated to have a non-Retina display @ 1024x768 resolution, which is the resolution of the iPad 2.
I don't see a non-retina iPad Mini with a starting price of $399. It's too expensive. If Apple wants that model to be successful, the most they can charge for it is a starting price of $299 for the 16GB version.
Now if Apple pulls a rabbit out of their hat and introduce a retina 2048x1536 iPad Mini then yes, I can definitely see it having a starting price of $399(16GB). It would be great if Apple just drops the iPad 2 from their lineup and introduce a retina iPad Mini. That way their entire iOS produce lineup would finally be entirely Retina-based. Just get it done and over with.