Well, rumors about a new DS aren't new. But this one comes from a Newspaper in Japan

http://img220.imagevenue.com/img.php?image=47259_00000000_122_478lo.jpg
http://img210.imagevenue.com/img.php?image=47270_lib056842_122_146lo.jpg

Acording to NeoGaf the translation goes:

Again this's only a rumor. At this point we don't know if it's a new model of the old DS or it's the DS 2 (I don't think it's the DS 2)

Source: http://www.neogaf.com/forum/showthread.php?t=336727&page=2

images dont work, the links arent in full text

Wow... that would definatly hurt PSP 3000 sales :o

{delays DS purchase}

Fixed. But they're only Japanese Newspapers scans. (if somebody know japanese maybe can confirm or bust the translation)

yeah just noticed, i thought they were actual pics of the ds lol

thats a pretty substantial re-design, might be the DS2

Hmmm, lucky I held off on finally getting a Lite yesterday...

Why would a redesign get a larger screen?
The only screen improvements would be brightness, contrast etc.
If they would increase the size of the screen it would have to include the touchscreen, and how would it work for games that require a touchscreen?

I'm assuming the touchscreen works based on which pixels you are pressing. A larger touch screen would still have the same resolution so no modifications need to be made.