I seriously doubt that Apple will release a 7" in short order. I fully expect them to release an iPod Macro or some variant in the future, but after Job's tirade, I wouldn't expect him to eat his hat quite so shortly afterwards.

Jobs went off on netbooks as well, but then the Macbook Air @ 11.6" was released a few years afterwards. Granted there was a non-ATOM core, but his original complaint was the size. This shows that Jobs ego isn't immune to market forces; which lends crediblity to the foresight of a smaller slate. However, the MBA was positioned VERY differently from a netbook, and that positioning would take time, especially given public memory.

I can't see a 7" iPad being released soon. Perhaps in a year or two.

But I could be wrong.