What's confusing about the smallest iPad being the cheapest iPad? Makes absolute sense to me . I did say iPad mini for $329, but you're completely ignoring the mini in all of this. There's your $329 iPad.
And as i said before, 10.2 is between 9.7 and 10.5 so this new iPad could meet in the middle with price point and take over the $399 iPad mini price.
Trying to enforce an arbitrary rule like the smallest has to be the cheapest can’t take into account the fact that although smaller, the mini has better internals and a much better display than the $299 education/entry level iPad.
There’s really very little to be confused about regarding the iPad lineup and how consumers might make their choice:
1) If you want a small(er) iPad, you have only one choice, but as a smaller version of the Air 3, it’s very nicely equipped.
2) If you want a huge iPad, you also have only one choice. But you better have a grand or two to blow because it ain’t cheap by any stretch.
3) If you want a “normal” sized iPad, you have three choices. Not one, not two, but three(!)

But is that confusing in any way?
- good — 10.2” starting at $299
- better—10.5” starting at $499
- best — 11.0” starting at $799
For education, younger kids and those who want the lowest possible price, would they choose anything but the good iPad? If you want something that’s faster, has more storage and a visibly better screen—and your budget can take an extra $200 hit—you might well choose the Air. And assuming you’re not particularly price sensitive and you only want the best, you’ll buy... the best.
As others have noted, model selection is largely driven by price. No one cross-shops the mini vs. the 12.9” Pro, or even the budget 10.2” vs. the 11.0” Pro (at nearly three times the price).
Some say get rid of the Air, but to my mind, there has to be room between a $300 cheapie—targeted mostly to education—and an $800 spare-no-expense model.
btw if I had to hazard a guess, with respect to market share of the $300/$500/$800 regular-sized models, I’d say something like 60%/30%/10%. I wonder what others think?