According to Nikkei newspaper in Japan, Nintendo's new console will use a six inch controller, allowing for tablet like functionality. Nikkei, a fully trusted source in Japan, has also claimed the console will be released late 2012.
The controller will feature a touch screen and camera functionality. Apparently the idea the tablet will allow for some sort of portability for added gaming convenience. According to Nikkei, this is a response to the increasing penetration of the smartphone market, and an attempt to regain Nintendo's lost ground over the last year.