I think that it is a combination of factors. Primarily, people are interested in a reader that is portable. The 6 inch screens are ideal for this purpose. They fit easily in peoples purses, backpacks, and briefcases. I think the 10 inch screens are popular with the folks who want a larger screen for PDF useage.
I am sure there is a market for a 7 or 8 inch screen but it is too small to be explored right now. The e-ink screens are not cheap to manufacture. The popularity of the 6 inch screen means that the production costs on those has probaly dropped. There is enough demand for the 10 inch (or close to 10 inch) screens that they are affordable. Producing a 7 or 8 inch screen would probably be costly based on the expected demand and would take away from producing the more popular 6 inch screen.
I would expect new size screens as the e-reader prices continue to drop but that is probably a year or so out.
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