I wouldn't be surprised to hear that Nintendo had (more or less) finalized the hardware, and they're experimenting with software that takes advantage of the unique characteristics of the new system; but I would be surprised if it was going to be released before mid-2010.
I expect Nintendo to go the predictable route with the internal hardware on their next handheld, and to combine the Flipper/Hollywood and Gekko/Broadway processors from the Gamecube/Wii with the mosys ram on one processor using a 45nm (or smaller) process; this will give them a system which is excellent for porting games from the Gamecube or Wii to, and allow them (and other) developers to reuse their tools and technology from Gamecube and Wii development. The user interface is far more difficult to predict, although you could assume (for backwards compatibility reasons) Nintendo will choose to have two screens, at least one of which is a touch screen (possibly multi-touch) and it will continue to have a d-pad, four face buttons, two shoulder buttons and a microphone.
Now the reason I don't expect a DS 2 any time soon is that there is no real reason for Nintendo to produce one at the moment. So far this year the DS has sold (roughly) 14 Million peices of hardware and will likely sell an additional 20 Million by the end of the year, it has the lowest development costs (by a wide margin) and the highest software sales (by a wide margin), and it has almost as many unique game being released for it as all other consoles combined.
