Apple may be working on a new 8inch iPad model, despite Steve Jobs' objections last year prior to his passing. The Wall Street Journal is reporting that Apple does in fact already have an 8 inch iPad in the planning and demo stages. They are apparently showing their prototypes to several partners within Apple's parts and third party supply chains according to an unnamed insider's intel.
This sparks the rumors of the iPad Mini again, which is going to pack the same type of resolution as the iPad 2, simply on a smaller screen size. The fact that Apple is working with suppliers however does not suggest that the iPad Mini is ready for mass production, or even that Apple will launch the device. As WSJ also reports, this is typical trial run strategy for any Apple device considered for development, but may not ever enter into the hands of the public.
Source - Wall Street Journal