Reported on
My Digital Life and several other sources:
"If you are (an) Apple’s iPad lover but think that its weight is too heavy to be carried around, the recent rumor of having a 7-inch smaller size iPad seems to get solid confirmation with reliable source from Taiwan. Economic Daily News, a major newspaper publisher in Taiwan has recently disclosed a few potential vendors that are already working on iPad 2 with its targeted availability date by end of this year or early of next year ...
... preliminary specifications indicated that the next generation iPad will be much lighter with merely 1.1 pounds (versus 1.5 pounds for existing model) thanks to its smaller panel at diagonal 7-inch as compared to 9.7-inch for current iPad. However, it will be redesigned with much powerful ARM Cortex-A9 (current version is based on Cortex-A8 architecture) with 512MB memory RAM with unknown storage capacity."
Looks interesting, and possibly a way to bring down the entry barrier for those who find the current Ipad just too expensive (at least, here in the UK)