Interesting ATLANTIS connection: Plato said that Atlantis was an island populated by humans who coexisted with pygmy elephants, and that it was destroyed by a volcanic eruption.
This recent discovery of these "pygmy humans" on the island of Flores adds a new aspect. Flores is within this "Sundaland" region, and these creatures are thought to have lived there from 95,000 - 13,000 years ago. They could have walked across the flooded lowlands, which during the Ice Age were high and dry. No need for boats as someone here alluded to....and, these small people hunted "pygmy elephants" and according to scientists, this race of creatures was wiped out by a volcanic eruption about 13,000 years ago....so Flores could have inspired the legend.
I've read some of Hancock's books, you have to understand he has an agenda to find that long lost civilization, and he's looked everywhere on Earth.