For me, an iPod touch is too small to read a book on and the iPad is too expensive. An iPad mini is a good compromise, as a 7" display would be perfect for reading on.
If the iPad Mini is true, and the price tags are correct, I think they might replace the iPod Touch. I would name it "iPad Nano" lol.
I don't think you'll see people jogging with a tablet... That reason^^^ is why the iPod touch won't die. Also think...if you were young and wanted a 7" iPad for Christmas...what do you think your parents would get you...the tablet? Or the iPod touch? There's no way the iPod touch will die. This is just a move to target the cheaper-priced competitor tablets.
It'd be a nice step-up from my iPod Touch, too. Seeing how I don't have a job (yet), I haven't been able to get my hands on an iPhone/iPad, but if the price tag is true, I'd finally be able to get one. It'd be also nice to not have to bring my laptop with me whenever I go to school or anywhere else.