What do you mean by a better display? Merely a higher resolution? The iPad’s IPS panel is great and I personally hope that they don’t go with other technologies. An increased resolution would be nice but unlikely.
I honestly think they made the resolution only 1024x768 on purpose to reduce the amount of time it will take to be able to cost-effectively double it. If they had shipped with a 1280x800 screen (like the Xoom's) off the bat, it would probably tack on an extra iteration before they could double it.