There's more evidence today that Apple could be thinking hard about a smaller iPad.
File this report under "roughly translated reports from Chinese news outlets talking to sources at Apple's suppliers in the region" if you must, but Taiwan's United Daily News appears to be reporting that Samsung and AU Optronics have sent samples of a 7.85-inch screen to Apple.
The report backs up prior rumblings we've heard from Apple's supply chain about some kind of "iPad mini," possibly at a much lower price point than the iPad 2 to compete with the $199, 7-inch Kindle Fire.
The idea of a dimensionally-challenged (or advantaged, depending on your user profile) iPad doesn't jive with much of Steve Jobs' tablet rhetoric, however. The late Apple founder famously dissed 7-inch tabs, saying it wasn't an optimal size for apps or for most users' fingers.
Lots of iPad 3 rumors have also pointed to a significant resolution upgrade that's on the way. It's difficult to imagine Apple making that kind of improvement while also shrinking the screen.
So if Apple is working on a smaller iPad, it doesn't seem likely to be the iPad 3--which puts us into the dark territory of the multiple new devices rumor, so I'll just stop right there.
To recap--someone, somewhere in Apple's wide, wide universe is likely at least thinking about the idea of a smaller iPad. We'll see if it goes any further than that.