Apparently, it'll use an iPod touch camera.
A huge new rumor for the iPad 2 has burst out of Taiwan and into our hearts. Just days before the iPad's first newspaper is launched, Ming-Chi Kuo of Concord Securities has sent out a report over anticipated features on the iPad 2. Contrary to earlier rumors (but concordant with common sense) Kuo does not believe the new iPad will have any sort of retina display.
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It will be 30-35% thinner than the current generation, and will have a screen optimized to cut out glare and reflection. This new iPad is also expected to see a leap in processing power, possibly up to a dual-core 1.2 Ghz Cortex A9. The new SGX543 GPU will deliver 200-300% more graphics power than the current iPhone.
The iPad 2 is also expected to see 512 MB of RAM. Which will leave it behind the Xoom in terms of multitasking ability but, well ahead of it in speed.
Kuo also expects to see the new iPad come in both CDMA and GSM versions, as opposed to one dual-mode "world" iPad 2. While this analyst had nothing to say on the widespread rumors of an SD slot, he does predict that the iPad 2 cameras will be closer in performance to the (relatively) low quality iPod touch than the iPhone 4.
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Apple appears to be capable of producing some 4.5-5 million second-gen iPads in the first quarter. If so, they're certainly expecting faster sales the second time around. It's amazing what a couple of cheap cameras can do.