Well if it was that vs. an old 10" iPad, sure, that has a lot of merit. But I can only assume that if a new 7" got those features, there would be correlating new 10" iPads with those same new features. Right? Maybe not immediately, but surely not too long after.9to5mac is saying that it would be better than the current iPad with a "Retina" like display and front facing camera.
Maybe they could rename the iPod Touch to the iPad Nano. Cause really, that's what it is. And the 7" could be the iPad Mini. Then it's just a matter of picking your ideal size.