The equation of the circle is:
$x^2 + (y - 1)^2 = 1$,
which represents a circle with center $C(0, 1)$ and radius 1.
The midpoints of all chords passing through the origin lie on another circle. The center of this circle is the midpoint between the origin and the center of the given circle, and the radius is half the radius of the original circle.
$\left( \frac{0 + 0}{2}, \frac{0 + 1}{2} \right) = \left( 0, \frac{1}{2} \right)$.
Thus, the equation of the locus of midpoints is:
$x^2 + \left( y - \frac{1}{2} \right)^2 = \left( \frac{1}{2} \right)^2$,
which simplifies to:
$x^2 + \left( y - \frac{1}{2} \right)^2 = \frac{1}{4}$.
Now, we need to find the points of intersection of the circle $x^2 + \left( y - \frac{1}{2} \right)^2 = \frac{1}{4}$ with the line $x + y = 1$.
First, solve for $y$ in terms of $x$ from the line equation:
$y = 1 - x$.
Substitute this into the equation of the circle:
$x^2 + \left( 1 - x - \frac{1}{2} \right)^2 = \frac{1}{4}$.
Simplifying:
$x^2 + \left( \frac{1}{2} - x \right)^2 = \frac{1}{4}$.
Expand the square:
$x^2 + \left( \frac{1}{4} - x + x^2 \right) = \frac{1}{4}$.
Simplifying:
$x^2 + \frac{1}{4} - x + x^2 = \frac{1}{4}$.
Combine like terms:
$2x^2 - x + \frac{1}{4} = \frac{1}{4}$.
Cancel the $\frac{1}{4}$ terms:
$2x^2 - x = 0$.
Factor the equation:
$x(2x - 1) = 0$.
Thus, $x = 0$ or $x = \frac{1}{2}$.
For $x = 0$, substitute into the line equation $x + y = 1$:
$0 + y = 1 \implies y = 1$.
Thus, one point of intersection is $P(0, 1)$.
For $x = \frac{1}{2}$, substitute into the line equation:
$\frac{1}{2} + y = 1 \implies y = \frac{1}{2}$.
Thus, the second point of intersection is $Q \left( \frac{1}{2}, \frac{1}{2} \right)$.
Now, we calculate the distance between $P(0, 1)$ and $Q \left( \frac{1}{2}, \frac{1}{2} \right)$ using the distance formula:
$PQ = \sqrt{(x_2 - x_1)^2 + (y_2 - y_1)^2}$.
Substitute the coordinates of P and Q:
$PQ = \sqrt{\left( \frac{1}{2} - 0 \right)^2 + \left( \frac{1}{2} - 1 \right)^2} = \sqrt{\left( \frac{1}{2} \right)^2 + \left( - \frac{1}{2} \right)^2} = \sqrt{\frac{1}{4} + \frac{1}{4}} = \sqrt{\frac{2}{4}} = \sqrt{\frac{1}{2}} = \frac{1}{\sqrt{2}} = \frac{\sqrt{2}}{2}$.
Thus, the length of PQ is:
$\boxed{\frac{1}{\sqrt{2}}}$