In a post where he predicts two versions of the Apple tablet, one with cellular connectivity and one without, Jim Dalrymple says “There has been speculation that Apple would release a 10-inch model and a smaller model (maybe 7-inch), but that makes no sense to me.”
Since I'm already way out on a limb on this, I'm going to slip just a bit further out to speculate that Dalrymple says this because he's probably assuming that if there are two different sizes and only one gets cellular connectivity, it would be the larger one. I think that's a bad assumption, and that it makes far more sense for the smaller device to get cellular and the larger one Wi-Fi, Bluetooth, and probably infrared, but no cellular.
Think about it, size and portability are inversely related, whereas portability and the need for cellular are directly related, and people are already accustomed to sacrificing screen area for portability, else we'd be using 24-inch laptops. But while a 7-inch screen should be fine on a hike or in a lecture hall, when sitting in your own living room you're going to want something larger, large enough to reasonably serve as an HD display.