There's a reason why Apple is now calling it's high-end iPad "iPad with Retina Display." It's because the company is going to continue selling the iPad 2, which doesn't have a Retina Display, and the iPad Mini, which also doesn't have a Retina Display.
The iPad Mini's has a 7.9-inch display that pushes a 1024x768 resolution—the same as the iPad 2. Apple claims it found the 7.9-inch to be ideal for recreating the iPad experience in a smaller form. Since it has the same resolution as the iPad 2, app developers won't need to reconfigure their apps for the new device. Every existing iPad app will work with the iPad Mini.