Naturally, that's all rumor. However, there has been talk of a Kindle Fire 2 for some time, including rumors of the current version of the Kindle Fire seeing a price reduction to $149 (down from $199) and continuing to sell, while a new, higher-resolution tablet (1280 x 800) slots itself in at $199.
With Google's Nexus 7 expected to be unveiled at Google I/O, perhaps as early as tomorrow, a new Kindle Fire 2 with upgraded specs is needed. The Nexus 7 is expected to carry a $199 price tag, but with a quad-core processor 1.3Ghz Tegra 3 processor and other upgraded hardware specs, as well as Jelly Bean (Android 4.1) as opposed to the Kindle Fire's forked Gingerbread build.
Among the other enhanced specs in the Nexus 7 are a 1.3Ghz quad-core Tegra 3 processor, a GeForce 12-core graphics processor, front-facing camera, and 1GB of RAM.
There has also been talk that Amazon.com would follow the same methology it did with the Kindle, by offering an ad-supported Special Offers version of the Kindle Fire. In the case of the Kindle, the ads only display as sponsored screensavers on the Kindle screensaver, so if they attempt to do the same on the Kindle Fire, we'll see if they manage to make it as unobtrusive.