New screen size
The rumour going around says that a 7" model is on its way to sit right beside the current 9" model, and due to Apple's resolution independence and growing number of developers, a new screen size wouldn't cause much issues beyond a few optimizations that have to happen from App Store developers to make things look perfect.
The new screen size will probably help the iPad to reach a lower price for consumers and compete with the other tablets.
New screen resolution
You can be sure that there would be a new screen resolution to the 2nd generation of the iPad. With Apple's Retina Display in the iPhone 4, there's no doubt that the iPad would soon have it. This is an inevitable upgrade that is going to force us early adopters who own an iPad and an iPhone 4 to jump in line.
New design
I’m doubtful of this one but it’s worth mentioning in this post. Apple generally waits two to three refreshes before redoing the overall hardware of its devices, but a thinner iPad may be in line that mimics much of Apple’s iPhone 4. Squaring off the design would help the device lay flat, but would also make it more susceptible to scratches. This is a maybe as Apple can legitimately call this a second generation iPad without modifying the outer shell. Of course, if it’s releasing a smaller screen size, it might be a good idea to change things up a bit to throw off the competition.
Built-in cameras
It is said that a revamped model of the iPad would feature cameras on the front and back of the device, just like an iPhone, enabling Apple's Facetime video conferencing service. Increasing the iPad 2's capabilities with a built-in camera would surely attract more consumers.
How the iPad would really look is a closely guarded secret by Apple. But with nearly 13 million units of the iPad expected to be shipped by year-end since its launch in April, the anticipation is growing over the next version.
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