OLPC is working on the next generation kids notebook dubbed XO-2 and gave a first glimps on what the XO-2 is supposed to look like.

The new future XO will have two touch screens and will be much smaller than the current XO notebook. The XO-2 will employ the dual indoor-and-sunlight displays. The keyboards and user interface elements will be adjustable to the age and skills of the kids using them.
It looks like a bit of what a future Nintendo DS could look like.
OLPC founder Nicholas Negroponte says that the XO-2 will be shipping in 2010. Will it still run Windows then?
More details, photos and a video on LaptopMag. More OLPC Coverage.