In a withering rant on emerging rival tablets like Samsung's Galaxy Tab, Steve Jobs basically confirmed there will never be a 7-inch iPad. It's too small.
He explains that the screen size of the 7-inch tablets coming out is really just around half of a 10-inch tablet, which isn't good enough for them. "This size isn't sufficient to create great tablet apps, in our opinion. While one could increase the resolution of the display to make up for some of the difference, it is meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one quarter of their present size."
That explains why the mysterious 7-inch iPad never made it past the prototype stage. (And, using the Galaxy Tab a bit, I agree. It's a very nice colour Kindle.)
That said, he's still pretty up on tablets themselves: "We've got a tiger by the tail here. This is a new model of computing."
Tiger. By. The. Tail.