Would Apple kill off iPod Touch and release iPad-Mini-kind-of-device ?

I read comments regarding Nexus 7 and its pricing which will likely kill an iPod Touch (killing means not completely destroying but distracting people to go for a 7 inch Tegra 3 device which already runs great games and has all features to compete with iPod Touch feature-by-feature without comparing specs). Apple points out iPod Touch as a"fun" device to use , its small , same screen size as iPhone and can run all iOS apps , it can play games,music,videos,browsing,so many apps and even face to face calls through Wifi.

I really expected lot for 10th birthday for iPod (which is 2011) but they didn't improve line-up like they did every year.

Apple cannot put base price of $199 but when iPad 4 or ("the new" new iPad) comes during first quarter of next year , iPad 2 Wi-fi can go for $299 for 16 gigs and that is equal to 32 gigs model of iPod Touch in terms of price , but still it lags behind Stock Android with 1GB RAM interms of device handling but atleast it can survive because of great content Appstore has or other way is releasing an 8 inch or 7.85 (as per rumors) with better specs than iPad 2 instead of pushing iPad 2 to lower price.

I know that these rumors about iPad mini coming from "2010 fall" on wards but this time it seems that apple has to make a bold move to capture lower market as well ,because 3GS is great example of apple being at lower market , What do u think ?