I know everyone keeps wanting a retina display on a new iPad but I think it's just not feasible yet.
To have a ppi similar to the iPod touch or iPhone 4 a 7" tablet device would need a resolution of 1800 * 1350 (roughly 4:3 aspect ratio like the current iPad).
If there is a smaller tablet in the works, my bet would be on a 7.1" by 4.5" device with a 7" screen of 1280 * 960 pixels, "only" 220ppi, the same as the new iPod Nano. I realize this would be a 16:10 aspect ratio and certainly unusual for a small device, but the resolution would live around these values.
To have a ppi similar to the iPod touch or iPhone 4 a 7" tablet device would need a resolution of 1800 * 1350 (roughly 4:3 aspect ratio like the current iPad).
If there is a smaller tablet in the works, my bet would be on a 7.1" by 4.5" device with a 7" screen of 1280 * 960 pixels, "only" 220ppi, the same as the new iPod Nano. I realize this would be a 16:10 aspect ratio and certainly unusual for a small device, but the resolution would live around these values.