That would go against Apple's current pricing model for ALL of their devices. The smaller they get the cheaper they are (iPod, MacBook, iMac, etc.).But if Apple goes for the higher end market, the ultra portable could easily have the same power and features as a current MacBook Pro at a fraction the size, but at 150-200% the cost.
However, I do hope that this rumor is true even at the expense of the seldom used CD drive (I'd buy an add-on if I had to). I haven't bought a MacBook partly because of the size as I currently own a 12" PB and love it.