I love these rumors that are completely unfounded and created just for the sake of generating noise. The new iPad Mini rumor is no different than others.
According to iLounge:
A seven-inch-screened version of the iPad is substantially finished and will be ready for announcement either later this year or early in 2011. Apple has been prototyping devices with screens of this size for a long time—quite possibly predating the original iPhone.
It seems that every year around the same time we hear the same insane rumors. Before, it used to be about a potential iPhone Mini. Now that we have the iPad, of course the noise is about an iPad Mini.
This is not happening. And if it was, it would be in April, when Apple refreshes the iPad.