With all the competition bringing out 7" tablets, did you really expect Steve to boast about how perfect 7" screens are? To me, the current ipad is simply too big... a 7" ipad really would be the perfect balance between screen size and portability.
Not to mention that Steve's logic makes no sense whatsoever... a 7" screen is too small for a touchscreen device, yet the 3.7" on the iphone/ipod touch is somehow not too small???? I think the millions of iphones/ipod touches sold thus far is a testament that 7" is not too small for a tablet device, especially one running a mobile OS like iOS or Android. I would agree with 7" being too small if the device is running Mac OSX or some other desktop OS with multiple applications and windows open simultaneously... but this isnt what we're talking about here.
Is anyone else confused about the logic?
Totally agree. Makes no sense to me either. If the number of pixels on a 7 inch screen match those on the present iPad, I would buy one in a minute. If Apple is touting the iPod Touch as a gaming device, why wouldn't 7 inches be even better?