I would also expect an anoouncement before the end of the year.
I agree. In the digital world, a 3 year old camera is (perceived as) old technology. The times when you could sell the same camera for 10 years are gone. The only alternative would be to significantly "upgrade" the S2 via firmware, which may or may not be possible.
So the more interesting question (or to be precise: speculation) is what would the S3 look like.
Personally, I don't lust for more MP. The only thing that that would allow me to do is to crop even more the hell out of the files. But at anything close to an un-cropped file, I can print at whatever size I need/want (and if I ever want to enter the Gurski print size league, I'd get a Phase back and a tech camera). In fact, I think that more MP can actually be counter-productive (slower processing, even greater risk of camera shake etc.). However, most likely the S3 will have more MP (60-70 would be my guess).
What I think the camera must have is better high ISO (a useable 2500 or 3200 would be great). Also, an increased DR would be great (I do hit the limits from time to time). But other than that, I am not sure what can be done IQ wise (for me, the IQ in good light is simply astounding).
However, what I would like to see, and what could persuade me to upgrade, are improvements as regards general camera technology, specifically regarding autofocus:
1.) Better autofocus tracking for subjects that move towards you. I don't need to shoot Formula 1 cars that speed towards me with the S3, but the camera should be able to focus track a person walking at normal speed. According to Michael Reichmann's test, the D800 can track a running dog, and there is no reason IMHO that the S2 or S3 should not be able to do the same. Even though there are ways to work around this, for people who use the camera as a general purpose travel camera, this would be a great improvement. In fact, I hope this could be implemented in the S3 through a firmware update.
2.) Higher frame rate. Again, no reason why the S2 or S3 should not be able of shooting at a higher rate, similar to that of the S3.
There may be other improvements, such as live view, a bigger screen, faster zooming into the pictures, focus masking etc., but all of the are of secondary importance for me (if at all).
OTOH, what I hope Leica will not do is to mess around with the interface. Indeed, the purity and simplicity of the user interface is one of the reasons why the camera is such a joy to use; it also is IMHO one of the three USPs (unique selling points) of the camera (the other two are the lenses and the view finder--who wants to look through another DSLR view finder once you've looked through the S2 finder?).
Two final comments:
First, I have no doubt that Leica will continue the S line and improve it. They created a unique and very successful product from scratch. I can't see any reason to give it up after just a few years. Moreover, Leica is a luxury brand and presents it like such (new Leica stores etc.). As a luxury brand it needs a flagship product such as the S line.
Second, I also assume that the decision which improvements will be incorporated into the S3 will be guided by who are the buyers of the camera. My guess is that you have broadly three categories:
1.) Professionals (of which 50-75% use the camera in a studio or in controlled situations, including weddings and the remainder in the field).
2) Gentleman photographers, i..e, the serious hobbyist who like myself, Kurt, paratom, or glenerrolrd use and enjoy the system, who bought the system because of the pictures it produces and in order to take pictures, and who are able to spend 50k on a camera and lenses (and who can do so without having to take out a loan or break the bank).
3) The rich trophy hunter who buys the camera because of the brand prestige and because it is expensive (many of those are now in Asia or Russia).
It is difficult to guess what percentage each group represents, but I think that group 2 likely represents some 50% of the customers, group 1) 30% and group 3) 20%.
Each group will have different demands and Leica will decide which group it will target.
Anyway, I think I played enough Leica analyst for today. I only hope that whatever the S3 will look like, Leica is going to continue to upgrade as much as possible the S2 through firmware updates.