So, the iPad4 goes back into production to replace the iPad2 which is now going out of production. The iPad4 now becomes the 'entry' iPad, selling at $399.
When Apple launched the iPad Air, it swiftly kicked the fourth-generation iPad to the curb, but kept the iPad 2 around as an "entry level" option. At the same time as the company has tweaked the iPhone lineup, it's also pulling a switcheroo in the tablet space -- dumping the iPad 2 and replacing it with the Retina-and-Lightning model. The unit is back on the Apple store for the same price as the Retina iPad Mini, so now it's just a decision as to what size slab your hands can carry.
This is really about setting a low end model that isn't completely overshadowed by Amazon, Samsung, etc. units. The iPad2 was pretty long in tooth at this point and needed to be kicked.