Apple’s iPad has been the darling of the rumour mill for months now, and now there is talk of a couple of interesting developments.

According to Digitimes, Apple will follow up the launch of the iPad 3, slated for March 7, with the introduction of a stripped down iPad 2, which should feature 8GB of storage and sell for a pretty competitive $349 to $349. The decision makes sense, as Apple used a similar approach with the iPhone last year.

In addition, rumours of a smaller iPad are not going away, either. The baby iPad is said to feature a 7.85-inch screen, probably the same 1024x768 resolution used on current iPads and it should sell for just $249 to $299. Samples are said to be out already, but volume production is not expected until Q3. The 7-incher would allow Apple to counter competition from affordable Android units, namely the Kindle Fire and Nook.

Late Apple CEO Steve Jobs dismissed the notion of a 7-inch iPad two years ago, so the rumours are not going down well with some observers, who believe Apple will stick to 10-inch tablets for the foreseeable future.

More here.