If this was just an ordinary rumor, I would categorize it as such; however, this news comes from a rather reputable source — the Nikkei news service.  According to Nikkei, the new hardware revision could go on sale as early as this year in Japan.

Instead of the current 3.25-inch screens, this new model will have screens slightly larger than 4 inches; therefore, it’s actually larger than the PSP Go’s 3.8-inch display.  Because of the higher production costs, the new DSi will be more expensive at ¥18,900 (about $205).

Nintendo hasn’t said anything on a western release yet.  To those who already own a DSi, be wary of upgrading.  Transferring DSi Shop content from one system to another is impossible to do yourself.