John Gruber of Daring Fireball, arguably one of the more knowledgeable and well connected Apple analysts around, has confirmed that Apple has prototype iPad devices running at 2048x1536 pixels.
However, Gruber (opens in new tab), like us, does not believe that Apple will launch a "retina display" tablet anytime soon (he suggests that this may happen in 2012). It is likely that the upcoming iPad 2 might have a higher pixel density but it probably won't reach 270 ppi as speculated.
He points out to the fact that a 3.15-megapixel iPad display would be prohibitive to produce and to manage. The current iPad only has 256MB shared between the CPU and the graphics module and it is unlikely that even 512MB will be enough.
(That said (a) PowerVR is known for being extremely good at handling large resolutions with limited resources (b) many iPad competitors like the Xoom or the Playbook do come with 1GB RAM.)
Gruber believes that the iPad will stick to a more traditional XGA resolution, however Apple may choose to tweak the existing display to make it brighter, less power hungry and thinner.
We pointed out yesterday that an iPad 2 with a QXGA resolution would suffer from a lack of content, display huge black bars during videos and would require a lot of zooming in when reading traditional websites.