DaringFireball's John Gruber checked with his sources following the recent iPad 2 2048 × 1536 Retina Display rumors and they say it is too good to be true -- iPad 2 will sport the same 1024x768 resolution as the current iPad.
Its display may be improved in other ways — brighter, better power consumption, thinner, perhaps. Maybe it uses the new manufacturing technique Apple introduced with the iPhone 4 display, which brings the LCD closer to the surface of the touchscreen glass — making it look more like pixels on glass rather than pixels under glass. But my sources are pretty sure that it’s not 2048 × 1536 or any other “super high resolution”.
He pegs iPad 2 as an iPhone 3GS-style update -- better internals like CPU, GPU, and RAM (aka Apple A5?) but the same screen resolution.
It's a much more realistic, if much less fun prediction given current technology. Gruber's "little birdie" sources have also proven accurate in the past. We'll know for sure when Apple does their unveiling.