I don't understand the reaction, "Such a product wouldn't be useful to me, therefore it wouldn't be useful to anyone else (and anyone who did buy it would be a fool), therefore Apple isn't going to make it, and therefore the rumor has to be false." Even more incomprehensible is the reaction, "I don't want such a product, so please, Apple, don't make it for anyone else to buy, either!"
The iPad Mini rumor makes total sense to me. Is such a product technically feasible to make? Yes. Does it conflict with existing technical standards (i.e., "The iPad Mini is rumored to have a 1:1 aspect ratio and a 97 dpi resolution to keep down costs.")? No. Does it fill a void in Apple's product line? Yes, for those who want something sized like a Kindle. Forgetting about size preference, is there anything that would compel people to buy something with less capability than the iPad? Yes, a lower price. Is there a market for it? We won't know until or unless it's released, but I'm willing to bet yes, for the many reasons that others have stated. Can Apple sell it at the rumored lower price point and still make a profit? That's the only thing I question. Would it cut into iPod Touch sales? Maybe, but if someone decides to spend $250-300 on an iPad Mini rather than $200 on an iPod Touch, isn't that better for Apple, assuming profit margins are similar?
Going by the logic of some of the posters, why would Apple ever have come up with the MacBook Air, when the 15" MacBook Pro is so more capable? There's no market for such a thing, I need the full power of the MBP to do what I do, so everyone else, must, too. Anyone who thinks they need something lighter than the MBP is a wuss and needs to work out at a gym. An 11" display is too small to do anything useful. If you can't afford a MBP, then save up some money until you can, rather than speding money on a piece of crap meant to cash in on the Windows netbook market. Well, hypothetically speaking, because Apple would never release something like a netbook. Steve Jobs said so.