Well actually they are. They are still making the 3GS, that's your cut down budget iphone.
So unless they have some new "super" feature for the ipad 3 they have a problem. How can you sell an ipad1/2 as a budget option if there's bugger all difference to the ipad 3? Also the margins might not let them slash the price of the budget option enough to get in and mix it up with the Android tablets. Hence they might need a real budget model.