The important question is "What could Nintendo change about the Nintendo DS that would maintain bi-directional compatibility yet would increase demand for the system?"
They could (potentially) make it smaller but without removing the GBA compatibility they're limited in how small it can get; they could increase the size/quality/brightness of the DS' screen but it is already as good as it really needs to be, and improving the battery life of the Nintendo DS would not gain much because the battery life is far from bad.
Nintendo is certaily working on a follow up system to the Nintendo DS but with how well the Nintendo DS continues to sell, and the fact that they're facing no new competition, it makes little/no sense to release a new handheld at this time.
