So Peter Jackson and New Line Cinema settled their litigation over Lord of the Rings and have an agreement for TWO Hobbit films. The first will be 'The Hobbit'. The second will serve as a bridge between The Hobbit and Lord of the Rings and will be based on the various supplemental materials Tolkien created. They're expected to hit screens in 2010 and 2011.
I kind of expected this. LOTR raked in so much money that New Line was desperate to make The Hobbit. And, at the same time, they knew fans would eviscerate them if they didn't use Jackson. The potential to rake in a couple more billion was something they weren't going to risk.