There are two ways to make a "mini" phone these days. The first is typified by Samsung and HTC, who have made Mini versions of the Galaxy SIII, S4, and HTC One with lower specs to match the physically smaller size. The second way is to make smaller phones that still strive to be the technical equal of their larger stablemates, like the Sony Xperia Z1 Compact and the Motorola DROID Mini.
I don't like talking about "industry insider" rumors. They are inevitably wrong about one detail or another, end up being total speculation, or are just downright trolls. Those that are true tend to be the ones that are very detailed and often leak their way out days, or hours, before a device's launch. Rumors that circulate months beforehand? Not so much.
But the Galaxy S III (if it will even be called that) is likely going to be the most anticipated Android device of the year, especially after the worldwide success of the Galaxy S II.
Word at DroidLife is that the original Droid is being phased out over the next few weeks (presumably with some promotions coming to help move the last of them off shelves). This is likely in preparation for the coming Droid 2, which is coming sometime in August.
The Droid 2 will be a direct replacement for the original Droid, complete with full slide out QWERTY keyboard (whereas the Droid X has none).