I've seen a lot of posts by people who obviously think the DSi isn't the next level of the DS.
The hardware upgrades and new features make it clear to me that this is the DS2. If Nintendo had merely added a couple features and made it slimmer I could understand why people would not consider this the DS2. The bigger screens, faster processors, and all the other new features mean that we will see new and more impressive games that would not have a chance of working on the DS and DSL. There is already a new Warioware download available for the DSi in Japan that demonstrates one of the many possible uses of the camera.
With every generation of Nintendo handheld some backwards compatibility is lost. The DSi no longer supports the GBA just as the original DS didn't support GB and GBC games.