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Legend11 said:
All Sega's development teams are currently working on software for other consoles, add to that the declining sales of some of it's key franchises and the fact that those Dreamcast 2 stats would put them in direct competition with Microsoft and Sony who're already losing hundreds of millions per year because of the cost associated with such hardware and it spells about a zero percent chance of happening.  Seriously how many software houses would be willing to risk millions on a Dreamcast 2 when they have Wii, Xbox 360, and PS3 as it is?  Also Sega unlike Microsoft and Sony don't have other divisions that could absorb the losses until it became profitable.  I can only assume it was a Sega fanboy's wet dream or something.

I got the link, the link isn't fake.

The only other link I could find was a supposed new handheld   watch

http://www.racketboy.com/retro/2006/04/segas-new-retro-friendly-handheld.html