The original Tegra was a 65nm chip made at TSMC, this one is 40nm also made at TSMC. The die shrink gives NVIDIA the ability to cram around 2x the transistor count into the same space.
At 260M transistors, Tegra 2 is a fairly complex chip. The total die size is approximately 49mm^2, which actually sounds big given the target market. The A9s occupy around 10% of the total die area.
The initial Tegra 2 chips will be paired with an 8.8mm BGA package for use in standard tech PCBs. Smartphone versions will be in smaller packages in order to save real estate.
NVIDIA is supplying 5" development boards to its partners interested in Tegra 2. NVIDIA tells us that there are "hundreds" of these systems out in the wild. As you can guess by the size of the development board, the initial target for this chip isn't quite a smartphone.

The focus of today's announcement is unfortunately tablets. They are going to be able to make it to market quicker and are farther along the design process. While we don't expect any vendor to have completely nailed the perfect tablet yet, we should see some interesting UIs and form factors.
Multiple sources have now told me that the reason we never saw Tegra 1 in any smartphones or mainstream devices until the Zune HD was a simple case of NVIDIA arrogance. NVIDIA assumed that selling Tegra to phone manufacturers was just like selling GPUs to PC vendors, and it most definitely wasn't. It's been a long learning process, but NVIDIA appears to be better as a result.
There are Tegra 1 smartphones in flight right now. Presumably we'll see the first at this year's Mobile World Congress in Barcelona next month. There are also Tegra 2 smartphones that are currently being designed. We will see these before the end of 2010.
Nvidia has nothing against Imagination's new PowerVR chip, period.
Anand is licking the wrong @ss again.