It sounded like after the Disney-Pixar deal that Toy Story 3 was killed quickly, but now it looks like Pixar's taking it over:
Pixar Takes Over Toy Story 3
Now that Disney has completed its takeover of Pixar, the animation studio will take over development of the long-gestating Toy Story 3, the Bloomberg news service reported. While reporting the company's first-quarter earnings, Disney chief executive officer Robert Iger said that Disney would release about two Pixar films each year, an increase over Pixar's earlier goal of about one per year, and that Pixar will take over production of Toy Story 3, a sequel that Disney's in-house animators had been working on.
Disney also said that it expects to release Pixar's animated Ratatouille in the summer of 2007. The film is about a rat who lives in a fancy Parisian restaurant run by a famous but eccentric chef.