The rumors of an iPad Mini have been rising on the comments of a Barclay Capital Analyst, Ben Reitzes. The new iPad could likely be a 7" sized tablet to complement the existing iPad line, and would compete against existing smaller tablets like the Blackberry Playbook.
Reitzes quotes, "We estimate Apple will ship 14.2 million iPad units in C2Q12, +20% q/q, but wouldn't be surprised to see upside given benefits from a full quarter of availability of the new iPad. For C3Q12, we estimate iPad shipments of 15.9 million (+12% q/q) and still hold out some hope that Apple may incorporate a 7" tablet model into its line-up (not in our model). Our global research team still sees some evidence of this product in the supply chain - and we wouldn't be surprised if it wound up in the iPod Touch category if it indeed sees daylight."