I'd be surprised if Apple released a 7" iPad. When I use mine, the term "bulky" doesn't exactly spring into mind. The only thing I feel a smaller size had, would be smaller text. (or God forbid, no difference but a new resolution -- however this would require a brain damage from Apple's part due to all the trouble, only for a minor new hardware design)
It would also be rather "un-Apple" to release a new design with no major advantages, since they try to keep their number of different designs down. So give me a rumor of MacBook Pro dying in favor of a new MacBook Air with beefier specs, and I'll have a much easier time believing that.