Here's a link to the story that I found relating to the PSX2 vs. N2000 on IGN64. Pretty neat stuff.

"Today's market is centered on current technology and great games. Nintendo and its licensees will be launching some of the greatest games ever for the Nintendo 64 this year, giving consumers yet another reason to buy our system," said Kaplan. "We are developing a more advanced videogame system, but we are not providing any specifics at this time."

If history is any indication, Nintendo has traditionally been at least one year behind the competition with the release of its new console. Although the company is already lining up second-party developers to start designing their titles with a "high polygon machine" in mind, the N2000 is still in a very early stage of development.

"Nintendo is surely working on their next-generation machine. But I don't think they will have it in the marketplace -- at least not in the U.S. -- before Sony," said Sean McGowan, an analyst at Gerard Klauer Mattison in a recent Businesswire release.

The innards of the next Nintendo console are currently being put together at SGI off-shoot Art-X in Palo Alto, California. No specifics as to polygon power or storage capacity are currently known, but IGN64 has learned that Nintendo is likewise investigating the usage of DVD media and is aiming for a machine with comparable graphics power to Sony's PS2. Like the N64, its successor will most likely not be a giant step up from Sony's machine, but it will arrive with solid specs and strong first- and second-party software backing.