You can still get them, but I'd wager you'd have to trawl taobao.com for them if you really want them. They used to be more common, but I'd wager they didn't sell well. They're too small for serious work, but too large to be properly portable. Even my 9" screen EEE PC was too small to get much done on and definitely large enough to not be particularly convenient to take everywhere I went. The original EEE PC had a 7" screen, IIRC.So there isn't... There are not a lot of 7" linux notebooks. There are lots of Android cheap laptops though. They all have the same huge bezel. Make that smaller, smaller keyboard and add gaming controls - remove touch pad. That will be totally different, much more portable.It would, but I believe there are already options in that size, just sans game controls.
http://www.ebay.com/itm/Black-Cheap-7-inch-Mini-LAPTOP-4GB-512M-PC-NETBOOK-Android-4-0-Notebook-New-/310702917568
That said, I think the general view is to not deviate too much from the existing Pandora. Fine.. but I think we shouldn't rule out a bit larger case and a larger screen. Maybe 5.5 or 6" will still be something people can accept. Then we are talking about a Pandora that might only be a half an inch wider.
From a portability perspective only a minor change, but I think every .1 inch bigger is worth it and will make the experience -imho- improve in a logarithmic manner.
Tablets aren't as bad because they eliminate the bulk and the weight that comes from a keyboard and that portion of casing.
You also don't seem to realize that offering a second size would cost them somewhere in the neighborhood of $50-100k for the cost of creating new molds for the new case sizes. Which would require a huge number of units of that size being sold. I just can't imagine the over head being worth it.