Would you pay an extra $50-$100 for a 7 inch iPad over the competition?
The display will likely be slightly lower resolution but you get more tablet apps. Those are the main differences.
The problem for Apple is there is no mini iPad market, just a Kindle Fire market.
Seriously?
Kindle Fire wasn't popular because of superior hardware or software, the only reason it sold was because it was the cheapest tablet on the market. I don't think anyone has brand loyalty to the Kindle Fire, they'll move on to whatever other cheap tablet is out there.