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Yes, I do believe there is one coming. Apple has officially announced an event for next week with the tag line "We've got a little more to show you" and I'd say that is a clear indicator for an iPad Mini.
They also see that there is a market for a 7" (ok, it'll be nearly 8") iPad. They see eReaders from B&N, Amazon, Kobo, Google and others are doing well, or will have better products in that range shortly.
They want a slice, a very big slice of that pie, and being brutal, I think they'll get it and dominate the 7" market in the same way they do the current tablet market.
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