I was convinced I was getting a retina mini before the announcement. However, with the price increase for the mini and the weight and size decrease for the air, I think air is the way to go. I thought that perhaps for travelling the mini would be better, but honestly, for the few times I want a travelling device, I can bring my ipod touch or buy a Nexus 7 which is even smaller than the mini and would therefore fit in pockets better AND includes GPS for FAR less money.
But keep in mind as Steve said a lot of R&D went into the original ipad and it was determined to be the best, most productive size and there is a reason they produced a 9" model and that's what I'm most likely going with, after trying both out at the store. Not to mention for $100 more I'm getting almost 25% more screen and a much larger (~50%) battery.
The screen on the iPad mini is 43% larger than the screen on the Nexus 7. I had a 3rd Gen iPad and switched to the mini last year. It's great on trains or while a passenger in a car. I intend to get the Retina Mini this year, if I can find one. That said, the Air is tempting since they got the weight and size down a lot. However, the mini's screen is a good size, as well.
Remember, Steve Jobs was touting what he had to sell. His comments about 7" devices is also frequently taken out of context. Remember, it isn't just about an extra 0.9". It is also the 4x3 aspect ratio compared to the narrower 16x9 ratio of the 7" Android devices.
The way I see it, the Air and mini are virtually identical devices now. The Air is $100 more and has a bigger screen and battery. The mini is $100 less and has a higher pixel density and is more portable. It isn't really the same situation as last year, when the $329 mini had an older processor and lesser quality screen. To me, the mini is "more" for less.
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Funny. Before the event, everybody wanted a retina mini because many claimed it was "just a better size", but now it seems many are crossing back to the bigger ipad, the air.
Personally I think the marketing has worked. The name air makes it feel new and special.
Be that as it may, I still think the iPad Air is an fantastic piece of kit and will be getting one to replace my ipad2!
The weight differential between the iPad 4 and iPad mini was substantial. Now it is much less betwen the iPad Air and new iPad mini.
I think Apple's move was two-fold. They obviously don't have enough iPad minis to go around. Perhaps they got caught flatfooted and weren't planning to release a Retina version until 2014 but had to change their plans when the Nexus 7 and Kindle Fire came out. Or perhaps they just had trouble achieving yields (since the mini has a similar PPI to the Nexus 7 but 43% more screen size and pixels). Either way, it will be hard to get.
By pricing the mini at $399, they may be trying to "upsell" people to the new iPad Air at $499. First of all, they'll have plenty of iPad Air in stock. Lately the mini has been outselling the larger iPad. This may change that, at least temporarily. Once supplies are in order, I wouldn't be surprised to see a price adjustment some time in 2014 (maybe to $349).