Bigger screens of course! Do they realize this will actually make all of the games look worse? Without increasing both the resolution and horsepower, this new DS will likely feel like a downgrade. Yes, that statement includes a pretty big assumption. It's a safe one though. Assuming this new DS rumor is true at all, it's safe to say that if it did feature a significant performance hike, Nintendo wouldn't be quietly sneaking it out without a proper E3 unveil.
The rumors have been referencing two reasons for this new system: to compete with the better screens on the iPhone and PSP, and to make the system friendlier for older players. The first one is laughable. It's not going to compete with those screens. In fact, it's going to do just the opposite. It will emphasize the shortcomings of the DS screen even more. The reason people like the DS/DSi screens so much is because of their crispness and clarity. This has everything to do with the relative pixel size. The DS's pixels are already significantly larger than those of the iPhone. This rumored new unit will make that difference even greater! Check out the comparison image below. These images should be close to life size if your monitor is close to 72 DPI. Notice how the larger dimensions make the game feel more archaic?
This is the primary reason the Game Boy Micro is such a great device. It did the exact opposite. Shrinking the screen size makes the relative pixel size smaller, which improves the visual fidelity of the experience.
This all says nothing of the increased bulk this rumored device would require, which would take the DS farther way from another competitive advantage of the iPhone and PSPgo, that being the ease of carrying the device around in a pocket. Just look at what would have to happen if the same clam-shell design and button sizes were maintained ("new" DS mock-up on left, DSi on right).
Maybe this mystery machine is the true "DS2", and Nintendo is bucking tradition and going for a surprise launch. If that's the case and the four-inch screen spec is true, they need to leave the vertical resolution and height alone, and instead move to a wider format. This would allow for original DS games to run at the same DPI that the DSi does. Newer games could then take advantage of a larger screen without the ugliness inherent with larger pixels. Assuming a clam-shell design and equivalent button sizes, it could look something like the image below. As you can see in this mock-up, the top screen acts as if it were playing an original DS game, and the bottom screen acts as if it were playing a "DS2" game. Pixels are all relatively sized to give you a somewhat precise feeling for what it would look like.
Sadly, this mock-up is nothing more than a pipe dream at this point. As the astute reader may be thinking, it does not do anything to help older people see the screens better for original DS games.
I've purchased every DS iteration up to this point, because I've felt that each one brings worthwhile new features to the table. I will not be buying a system that makes all my games look uglier. The DS is eating the lunch of the PSP and iPhone as a gaming platform because of its own competitive advantages. There is no reason to attack their screens unless it is done correctly.