There has been a very persistent rumor which rears up its ugly head once every few weeks. It’s about the iPad Mini, speculated to be a cheaper 7 inch version of Apple’s iPad. Many analysts believe that Apple may launch a cheaper 7 inch version of the iPad along with the iPad 3 next year.

Steve Jobs had always maintained that Apple would never work on a 7 inch iPad, as they believed that a 10 inch display was the minimum screen size required for a useful tablet.

However, the success of the new Amazon Kindle Fire tablet has validated that there is a market for cheap tablets. Apple currently dominates the high end of the tablet market, but Amazon seems likely to conquer the low end. If Apple launches a cheaper version of the iPad, it could potentially end up dominating that segment too, effectively ruling the entire tablet universe.

A new rumor, sparked off by a report in Taiwan’s United Daily News, states that Apple has received samples of a 7.85 inch display from AU Optronics and LG Display, implying that Apple could be working on a 7 inch iPad.

However, going by the current trend in the iPhone lineup, Apple wouldn’t go for a 7 inch iPad if it wanted to enter the low end tablet segment. It would rather make the iPad 2 available at a lower price point, while selling the iPad 3 at the current price points. Given Tim Cook’s operational genius, Apple could possibly make a cheaper iPad if it had the same design as the current one.

The iPad may go the way of the iPhone 4S, with the iPad 3 having the same design as the current iPad with more powerful hardware, and the current iPad 2 price being bumped down.

However, at this point, it’s all speculation. Knowing Apple, it’s pointless to speculate about its plans. But like everyone else, we will be tempted to.