The Nikkei trade publication, a financial newspaper in Japan, has a good track record when it comes to reporting rumors that turn out to be fact. They successfully predicted both iterations of the DSi and the 3DS, and certainly have some clout in the business world. That's why, when they say that Nintendo's new console controller features a six-inch touchscreen, we're inclined to believe them.
This rumor has been circulating for quite awhile, and while it's still hard to think of a six-inch touchscreen controller (that also features buttons) will be easy to handle or economical, when Nikkei says it, it's probably fact. In addition to the touchscreen revelation, Nikkei also confirmed that the controller will have a camera and can be used as standalone handheld gaming device. Could it be a 3DS? It doesn't seem likely, but we're not ruling anything out. Nikkei also said that the console will be out in "late" 2012. This is a little bit later than some were predicting, but again, considering the source, we're inclined to believe it.