The latest iPad rumors come from iLounge‘s Jeremy Horwitz' Twitter feed (via 9to5Mac). According to Horwitz, the next generation iPad will feature a front-facing FaceTime HD camera, and the rear camera will be more "iPhone 4S-like." 9to5Mac also heard Apple was prepping an 8-megapixel camera for the iPad 3 last summer.
Horwitz also tweeted that the iPad 3 will be thicker like previous reports have suggested. This is due to the rumored dual OLED backlights for the improved LCD display.
“Curve radiuses on the body will change only a little to accommodate the added thickness, not dramatically. Think iPad 2 Pro, not a redesign."
"Body of the next iPad is, as we previously reported, getting just a little thicker to accommodate new parts - little = 1mm give or take."
And finally, Apple will not discontinue the iPad 2, instead they plan to drop the price to around $399.
"Looks likely that iPad 2 will stick around at lower price point, say $399, and next iPad with high-def screen + cameras will sit atop it."
Previous rumors have suggested Apple will release a $299 entry-level Wi-Fi only iPad in March, followed by the iPad 3 in Q3 of 2012. Other rumors have said the next generation iPad (or iPads) could launch as early as February.
UPDATE: More Tweets from Horwitz:
"Incidentally, our source believes that the next iPad's rear camera will be the same as iPhone 4S's, b/c camera hole is very similar."
"If Apple is in fact moving the front camera to FaceTime HD, calls from the next iPad to current Macs + vice-versa will look _much_ better."
"Source thinks date will be similar to iPad 2's. Correctly says a January launch (never likely) would anger holiday 2011 iPad 2 recipients."