I don't know whether or not the "world's smallest" title is truly valid, but the Hover-Q indoor infrared controlled hovercraft is definitely small enough to fit in the palm of your hand. The flexible skirt lift system can be inflated in a second, it has forward, right and left control, and the IR control doubles as a charger (although there is no info on how long a charge will last). Nonetheless, it seems like a pretty decent deal at $34—especially since toys like this routinely go for $50 or more.
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The phrase "flexible skirt lift system can be inflated in a second" was inserted there by a marketing guy. A smart one too.