In a out of the blue announcement, Nintendo have announced the Nintendo 3DS and that it is set for release before March 2011. The Name Nintendo 3DS is a temporary name that will most likely remain. the Press release also mentions that on the Nintendo 3DS, "...games can be enjoyed with 3D effects without the need for any special glasses". The Press Release details that the Nintendo 3DS will be able to play both Nintendo DS and Nintendo DSi games, presumably Nintendo DSiWare games also.
There is wild speculation about the 3D effects that the 3DS will use. The Video below is one method where 3D effects can be achieved without glasses, but it is dependent on being able to sense movement. This game uses the DSi Camera to detect movement and create the 3D effect.
Using onboard sensors to create a 3D effect, like the video, is a cheap solution, and following the current trend from Nintendo of using "of the shelf" parts, makes this a highly likely solution. but its not the only solution. there do exist LCD displays that can produce a 3D image without the need for the viewer to wear glasses. this would be a more expensive option and limit the viewing angle, something that was highlighted in the Nintendo DSi XL, but it should work for the gamer as they would hold the 3DS close to their eyes.
Reports from Japan are saying that Nintendo have chosen the later and are going to use Sharp LCD's. these reports are also saying that whilst the Screens have been used in Japan on cellphones, they are unsuitable TV Sized. the reports say the LCD screens will be smaller than 4 inches diagonally, smaller than the DSi XL.
When the press release says that the 3DS will be compatible with DS and DSi Software it reveals that the the 3DS must have two camera's. the reports from Japan are also saying that the 3DS will have vibration, 3D Control Sticks (possibly a Analogue Nub or Two), Better battery life, and better Wifi. but those reports must be treated as rumour for now.
Patents have been found for a new version of a Nintendo DS Cartridge. The Patents show the cartridge being used on a current Nintendo DS, but it is possible that these are the cartridges for the Nintendo 3DS. as the 3DS is compatible with DS/DSi games, making existing cartridges fit with the 3DS makes sense. patent pictures show what could be a 3DS cartridge fitting in a DS, meaning DS games would fit in a 3DS.
Whilst alot of this is speculation, we won't know more information unitil E3 where Nintendo is set to release more information.
Press Release From Nintendo Japan Press Site (PDF)
Rumours from Engadget
Possible 3DS Cartridge From Siliconera