It is fairly plausible, however. A shrunken iPad would be a perfect replacement for the (hasn't been updated in nearly 2 years) iPod touch as the iOS "gateway d

It is fairly plausible, however. A shrunken iPad would be a perfect replacement for the (hasn't been updated in nearly 2 years) iPod touch as the iOS "gateway drug"; and it could still get away with a slightly higher (~$250) price point without lagging too far behind the iPhone and regular iPad in terms of components. That it would happen to put pressure on a segment Amazon and Google are currently exploiting Apple's non-presence in is just convenient.