Google has been rumored to be working with Motorola for the first officially-supported Android tablet. A tweet from Mobile Review Twitter account, implies that Motorola's tablet, called MOTOPAD, will be a 7 inch tablet and it will be the first one to come with Android 3.0 and have Google's full support.
The tweet might also suggest that this is just one of the upcoming tablets from Motorola and they plan on bringing others, possibly bigger, to the market. I think a 7 inch tablet has its uses, but I still think that only a 10 inch (or bigger) tablet can provide a full web browsing experience, and a 7 inch one doesn't offer me that much more than a 4.3 inch phone. I do think, however, that a 7 inch tablet would be pretty sweet for reading as it's very light and can be held just as well as a Kindle 3.
So people who are heavy readers, but don't want to settle for a black and white Kindle and want to have the power of a tablet as well, a 7 inch tablet might be the best choice. You might want to be careful with the battery as it lasts much less than the Kindle's and even less than one on a 10 inch tablet like the iPad, where the battery is also much bigger.