Aside from meeting so many great people at Sugar Camp #2 in early September I also had a chance to play around with prototypes of OLPC's upcoming ARM-based XO-1.75. And not just any prototypes because some of the Sugar developers brought along special units with a touchscreen!
OLPC XO - Touchscreen demo by olpcfrance
Now before you get too excited about all of this: From what I know it's not clear yet whether all XO-1.75s will come with a touchscreen, this will be an optional feature, or it will be limited to the relatively small number of prototypes which are in the hands of developers today. I assume in the end this mostly depends on how interested current and potential future deployments are in this feature and moreover whether they're willing to pay for the additional cost of the touchscreen.
Playing around with one unit myself it also became clear that there are a number of areas where Sugar needs to be adapted in order to work well with a touchscreen. For example the hover effect which is used on many user interface (UI) elements isn't really accessible on a touchscreen. Also some elements are too closely positioned to the display's edges so that it's impossible to reach them with one's finger while others are simply too small to select.
It will be interesting to see whether OLPC and Sugar Labs will be able to allocate sufficient resources for these and other necessary adaptations over the coming months. After all the software support is the key factor in deciding whether a touchscreen will add real value for pupils and teachers.
Update (September, 27): After I originally published the article Martin Langhoff (OLPC Association's Software Architect) got in touch via Google+. He clarified that OLPC currently has no plans to mass-produce an XO-1.75 with a touchscreen. The handful of prototypes which do have a touchscreen are only meant for software developers working on making Sugar run well with touchscreen interfaces in preparation for the XO-3.