Amazon is not going to give up without a fight. Hopefully we will see a Kindle 3 release right about the time when the iPad is released. Releasing anything after the iPad will surely be set up for disaster since a lot of buyers are just going to go for the iPad and be done with it.
As for features for a Kindle 3 device I'm hoping for a screen as large as the iPad but with Pixel QI technology and the Android OS.
Failing to come out with something before the release in march I will just go and buy myself an iPad for viewing PDF:s and technical manuals but I will still keep my Kindle for leisure reading since in my personal opinion no LCD or OLED screen can compete with reading books on an e-ink screen.
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