Well, I despise Apple almost completely, but I think they have a point here.
They point mainly to the higher end of the PRICE spectrum (dont get me wrong, their stuff is garbage for its price) and as so, they surely have little market for a wallet-concious, performance/usd-seeker client, for which, at this point, the Nexus7 is the clear winner.
But he 7" mark is like the minimum for me (and I guess for the majority in this site). It serves its purposes just right, but when you are apple, and you point at a high price market, you have to make your product a premium (supposedly) and that goes along with size. Most of the other tablets in that price range never shrink, and rather, they are quite large. And I suppose we all like the status quo as it is.