Canon's announcement of the Rebel SL1 (100D) is something I've already written about over on sansmirror (the gist: Canon has mirrorless tightly bracketed now). But what's it mean to Nikon DSLRs?
At first glance, the new Canon doesn't look much smaller than a D3200, but it's 7% narrower, 6% shorter, and 9% less deep. It also weights 19% less, which is probably a more telling statistic. If you go by first glance looks, you're probably inclined to dismiss it, but in the hand and around the neck, we're moving into territory not really seen much since film SLRs, and an area only the Nikon 1 cameras are going to match.
Should Nikon respond with a D1000? Technically, there's nothing keeping them from doing so (other than the fact that it would be a new camera platform they'd have to build up from scratch: they have no chassis that would match Canon at the moment). As I noted on sansmirror, the Olympus OM-D E-M5 now has a significant DSLR competitor that's essentially the same weight, very close in width and height, and really only differs in depth. That's probably one reason why Nikon should try their hand at the small DSLR, too, not so much that they have to match Canon. Of course, that just brings us back to the same old refrain: where are the DX primes? Small cameras need small lenses to stay small. Olympus still has that going for them.
Of course, the Nikon faithful who frequent this site want a different small DSLR: the FM3D. The FM3 film SLR, believe it or not, is bigger than the Canon D100: 142.5 x 90 x 58mm for the FM3 versus 117 x 91 x 69 for the Canon. Of course, we don't need the two areas to roll film up in, so we can probably narrow it right down to the new Canon's size, and then they'd be very close in dimension.
The crowd that wants an FM3D would want two things specifically that the D3200 doesn't have (the rest of the D3200 is perfectly fine for this crowd): Non-CPU Lens Data settings, and a non-plastic body. Well, technically they'd also want an FX sensor, but let's try to keep this something that will have broad appeal at the entry level and have carryover appeal for the serious crowd, too. So can the FX sensor, forget the metal body, but keep the AI lens indexing. Then make some darned DX lenses (16mm, 20mm, 24mm, 60mm would be a nice start, even at f/2.8 as long as they're small). Voila, a small Nikon DSLR that not only gets lots of entry users, but will be picked up as an extra camera by the serious Nikon shooter, too. Of course, it needs lenses, so launch it with at least one and show us in some way that you have plans for more.