Canon is now officially working on a new PowerShot compact camera with a large sensor, high zoom capability and compact body as you can see from this official Canon Hong Kong press release (thanks to the anonymous reader who sent me this info):
New PowerShot Digital Compact Camera Under Development
Featuring large image sensor, high zoom capability and compact body
Canon is developing a new premium digital compact camera that combines the merits of both large image sensor and high-magnification optical zoom lens in response to the demands from users looking for high quality high zoom performance. Offering both convenience from a compact body and excellent super telephoto performance, this camera is perfect for everyday or travel shooting in high quality.