It seemed obvious that this was the resolution Apple would choose for this sized device. The device is too small to support the battery power required by Apples retina display so battery life would have been horrible, it would have also added to the cost. As there are many 100's of thousands of apps that support 1024 x 768 screens it was inevitable that they would choose this resolution, rather than introduce a new, not compatible one.
Having played with the device in the local Apple store, the screen, while not as nice as a retina one on the full size ipad, is lovely, perfectly useable and you'll soon forget about the lower res, if you even cared in the first place.
Device specifications, while important, do not matter to the general public and these days, have little or no bearing on the user experience. I do wish it was £50 cheaper though, it really would be a no brainer then, as I've posted before though, with the iPod touch pricing as it is, the iPad mini was never going to be under £250.