MacRumors reports Apple's next-gen iPad may offer double the resolution of the current iPad:
A more practical approach would simply be doubling the resolution of the current iPad (1024x768) to 2048x1536 at a 260 DPI. While not quite a "Retina" display, it would follow with Apple's efforts to avoid fragmenting their product line. From a developer's perspective, the doubling of an existing resolution is much easier to support. Apple similarly doubled the iPhone's resolution from 480x320 to 960x640 when they introduced the iPhone 4. Like on the iPhone 4, older apps can will simply run pixel-doubled while native apps will take advantage of the full resolution of the new screens.
Based on some findings by @StroughtonSmith by way of @Xuzz on Twitter, it seems Apple is going to take this pixel-doubled approach again for the iPad 2.