According to blog what They Play, Nintendo is well into the process of developing it's next generation console which will, apparently, be with us "by 2011". Of course, pretty much any fool could make an educated guess that Nintendo is likely to be working on its Wii successor by now, but we're not indisposed to hearing some (however tenuous) confirmation of that fact. Besides, everyone else seems to be going speculation crazy so I wanted to get in on the fun.
What They Play's multiple (unnamed) sources are supposedly calling the device the Wii HD, likening the update to that from the GameBoy (and, presumably, GameBoy Colour) to the Game Boy Advance. Said sources are apparently also in consensus that the 'Wii' nomenclature will remain in some capacity.
Hardware is not, by these accounts, expected to compete with the likes of Sony and Microsoft's next generation systems, although HD visuals are on the bill. As with the Wii, Nintendo is expected to focus its efforts towards delivering a fun gaming experience, rather than out and out performance. It's an attitude that paid dividends for the Wii, and there's little reason to think it wouldn't work for its successor.
A lot could change in the next two-and-a-bit years, though.