Kindle 3 (Already) in the Works?

Rumor has it that Amazon is already working on a third generation Kindle e-reader device. According to the Wall Street Journal, the new Kindle is going to have a larger screen, designed to make it easier to view newspapers, advertisements etc. It is also thought that the new Kindle will have touchscreen features.

Although Amazon won't comment, speculation has it that the new Kindle will be available in time for the holiday shopping season. This doesn't surprise me given the decline in print advertising and the increase in popularity of digital reading. With a larger screen, newspapers and magazines may have more of an opportunity to get much needed ad dollars. And of course, Amazon would benefit from the increase in sales around the holiday season.

What do you think? Is Amazon working on this too fast, given that the Kindle 2 has only been around a couple of months?