Earlier quoted context omitted.
The way Steve vigorously came out against 7" tablets makes me suspect they'll launch one, too. His logic was rather questionable (you need to sand your finger tips to points to use apps on a 7" tablet, but not a 3.5" phone?).
What he probably means by that is that he doesn’t want any further fragmentation. A 7" tablet would need an optimized UI for the reduced screen size (you can’t just shrink down iPad apps or blow up iPhone apps), Apple doesn’t want that. There won’t be a 7" tablet anytime soon (within the next twelve months) and that whole September business is based on pure speculation, not any sources or evidence.
While I'd love to have an in-between sized Apple device personally, I agree with that line of thinking. I can picture what facing that would be like as an iOS developer - it would be a pain.