The resolution, they are putting retina displays in macbook pros but launch a tablet with non-retina display. Why?
And yes, it is this resolution solely to support legacy applications, possibly to reduce costs. But i can only speculate on the latter.
The original android g1 had greater PPI (180) than this thing.
The pixel density for the new iPad mini sits between the iPad 2 and iPad 3 with Retina display. As far as I'm aware, no one was complaining about the iPad 2 display.
In any case, I suspect the choice of resolution was driven more by compatibility concerns (i.e. it can run iPad 2 apps unscaled), and this paves the way for a 'Retina display' iPad mini at some point in the future.
Mainly, they are usually on the cutting edge of manufacturing technology for their parts. This year it is lamination, and there are only so many factories capable of doing this kind of lamination. I think doing the lamination for a retina display at this size would have restricted the manufacturing options and that capacity they'd rather put into the new iMac, Macbook Pros and retina iPad.
Secondly, cost. Retina is 4 times the pixels, and presumably significantly more expensive. A smaller display like this at the same resolution as the original iPad is going to be closer to retina than the original iPad.
Thirdly, it gives a nice upgrade for the future, to incentivize people to replace their device in a year or two. When the cost of the retina technology has dropped enough they can upgrade the mini to the same resolution as the iPad retina.
For new products, Apple tends to choose a mix of cutting edge and safe. The A5 is currently in volume production so it is a safe choice, where it was cutting edge last year, for instance.
Apple also has a food-chain. The newest processor goes to the newest product, and the secondary products (like the iPod touch and now iPad mini) which are in more price sensitive market positions (for instance the iPhone is subsidized by carriers but the iPod touch is not) tend to get the established one-generation-behind processors that are already cheaper to make. This way the A5 design lasts longer and the manufacturing capacity that is making it can keep making it.... while the A6 works on the lower feature size (requiring a more cutting edge fab).
For instance the A6 is, I believe 20 or 22 nonometeres, while the A5 was made on a 32 nanometer feature size.
Intel might be fabbing at 22nm, and probably some DRAM and NAND is on 22nm, but nobody is doing anything complex on 22nm right now. The rest of the ARM industry is on 28nm, and one of the things Apple gets by moving to TSMC is 28nm (TSMC are generally ahead of Samsung's fabs, but not by that much).
I also don't think they're withholding retina or cpus from anything so they can introduce that feature in coming years, this technology is moving crazy fast, it's already expected in higher end phones and tablets and after that it becomes normal.
Cost is the only reason they'd withhold anything, they target a market and what that market can pay and then they cram as much as they can into that price without sacrificing their enormous margins.