Near infrared maps of the planetary nebula IC 418 taken at 5 arc sec spatial resolution are presented. These show an extremely compact source structure at 1.65 microns, and very much broader and more elliptical emission distributions at 2.2 and 3.6 microns. The possibility that the near infrared continuum derives from small grains with low thermal capacity is discussed, and synthetic spectra are derived. These indicate a very much slower variation of flux with wavelength than would be deduced for grains at unitary temperature, and imply a near infrared continuum which is significantly cooler than maximum grain temperatures. Fits to the spectrum of IC 418 suggest that peak grain temperatures may approach 1000 K; for instance, compared to the observed color temperature of about 650 K. Finally, the relevant grains are required to be refractory and, given the large C/O ratio in this nebula, probably consist of graphite. Their mass is also required to be small, and is probably of order 2 x 10 to the -7th solar masses. This compares with the probable total mass for large dust grains of about 0.0001 solar masses. Although they are both small and warm, such grains would be expected to persist over the lifetime of the nebula, and may also be responsible for various NIR band emission features.