Kotaku says that both screens would have touch capability, which is reasonable to expect. They also point out that both screens will have a wide aspect ratio, which it's more difficult to believe unless they position the controls somewhere else (I don't see Nintendo sacrificing physical buttons for a pure touch interface.)

They also claim that this may not be the Nintendo DS 2, but a revision to the current model. Personally, I don't know how can that be. With such new prominent features, which will require a new generation of games to be fully exploited, it won't make sense to not name label it as the next generation DS.

In any case, they seem very confident about the news. So much in fact, that they used our Nintendo DS 2 3D mock-up to further highlight their scoop.

[Kotaku]

Update: We originally attributed this to IGN, but after some searching, it appears Kotaku was the origin of the story. We're not sure why IGN didn't attribute the story to Kotaku, but we've fixed the links now. – JC

We think that the timing of a new product introduction will depend upon the sales profile for the DS, and believe that lower than expected DS hardware sales could trigger an earlier launch for the new device. DS sales are solid worldwide, but are weak in Japan, leading us to expect an introduction of a new device in Japan before the end of the calendar year. We think that Nintendo has a new handheld device ready for launch in [Japan] before the end of the calendar year.

We don't know if this is going to be the Nintendo DS 2, but that's the most probable scenario, as Iwata is not very optimistic about new breakthroughs, and the DS touch concept works quite well. On the other side, it could be something that combines the DS with another device.

Or maybe Michael has eaten one too many magic mushrooms and his report stinks worse than Bowser's dung. [EDGE via Kotaku]

As you can see, he took the original design and added a whole lot of the iPhone and the PSP. Looks quite good to me, even while it still has some unresolved issues, like the hinge, which can't be like the MacBook because it will block the shoulder buttons. Still, a very doable, even slimmer form factor than the Lite which can perfectly fit all the not-so-crazy features we thought could make it to the next revision of the Nintendo portable console.

And before the anti-Apple camp gets up in arms, let's not forget that the original DS got redesigned with a clear inspiration on the Apple's all-white, all-shiny, all-simplicity iPod design. People didn't think the same could be done with the original DS and look what happened with the Lite.

Some more thoughts from the "buts" that people claimed about the first 2D mock-up:

"But the screen on top should be the same size"
Not necessarily. For compatibility, you can play original DS games letterboxed. Even new games could retain exactly the same format and keep backward compatibility if you want. The top wide-screen, however, could be used very well in most games. But specially, for media playback.

"But the it should be a totally new concept. Nintendo broke the rules and will do it again in the next generation"
That may be true, but the True Next Generation is years away. It took decades for Nintendo to change the paradigm of the original Gameboy to the Nintendo DS. Until the latter arrived, the first went through many iterations, each adding more things: smaller package, more power, color, backlighting, etc.

They milked the cow until it was dead. Then, they reinvented themselves with the DS. The next DS will be an evolution of power and features, not of basic concepts. It works great now, it sells like crazy, so you don't need to change it dramatically just yet. Nintendo just needs to keep the distance with the PSP and that will be it.

"But it will be too expensive to make"
Like I said in the original mock-up article, given the sinking prices of current components thanks to the proliferation of smartphones like the iPhone or multimedia players, a DS 2 with shaved corners, better screens and built-in multimedia playback will be very doable in 2008. Granted, it may not take this shape, but it will happen sooner than later.

"But it doesn't have Advance cart compatibility"
With downloadable games coming to the DS and dirty-cheap Flash RAM prices, the next version of the DS will probably have Virtual Console emulation, just like the Wii. Why deal with hardware when you can have it all in software?

[Gizmodo and Phil Nolan]