The VW Beetle is a cult favorite here in the States, but in Germany, it's not so well loved. That could be part of the reason why Volkswagen has been slow to produce a successor to the new Beetle, but word from Motor Trend is that two models could be coming shortly. The first Beetle will be based off the Gen-VI Golf and will hit production in 2010 or 2011.
Word out of Wolfsburg is that a second Beetle could be on the way as well, but this one would be based off the up! minicar. That would give VW a sub-brand Beetle lineup, kind of like what Toyota has with Scion, but with an eye on MINI buyers. The smaller up!-based Beetle would also be more true to the original Bug, which was a cheap and efficient "People's Car" with the engine out back (supposedly). Quality problems and a weak dollar have lead VW to struggle in the U.S. over the past few years, but an inexpensive, reliable car with top-notch fuel economy would go a long way toward reversing that trend.
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[Source: Motor Trend]