The fundamental issue is yield. The more pixels in a display, the greater the likelihood that you'll end up with an obtrusive stuck pixel or a significant number of dead pixels, rendering the panel unsaleable. This is one of the major reasons why we haven't seen any significant increases in the resolution of laptop or desktop displays in some years. The Retina display on the iPhone 4 isn't hugely expensive, nor particularly innovative - there are a number of other handsets with similar pixel densities. 960x340 is 0.6 million pixels, versus three million pixels in this rumoured iPad 2.
Very high resolution displays ameliorate this issue somewhat because bad pixels are less noticeable, but I just don't see how anyone could produce a display with such a vast pixel count cheaply enough to meet the iPad's price point.
If Apple have figured it out, the iPad 2 is almost irrelevant. This would be one of the most significant breakthroughs in display technology in decades. Bear in mind that 2560x1600 is the same resolution as the current class-leader in desktop displays, the $900 30-inch Dell Ultrasharp. In order to make it work, Apple would have to change the entire economics of LCD manufacture. I really do hope it's true, but I can't see how.
Part of the reason 30" displays cost as much as they do is that they're just physically larger, regardless of DPI. This requires a lot more yield-sensitive silicon on its own, and also requires a lot more in terms of display illumination.
Also, let's not ignore economies of scale: compare the number of iPads sold in the last year to the number of 30" monitors ever sold.
Very high resolution displays ameliorate this issue somewhat because bad pixels are less noticeable, but I just don't see how anyone could produce a display with such a vast pixel count cheaply enough to meet the iPad's price point.
If Apple have figured it out, the iPad 2 is almost irrelevant. This would be one of the most significant breakthroughs in display technology in decades. Bear in mind that 2560x1600 is the same resolution as the current class-leader in desktop displays, the $900 30-inch Dell Ultrasharp. In order to make it work, Apple would have to change the entire economics of LCD manufacture. I really do hope it's true, but I can't see how.