That would, in fact, be double the iPad's current 1024 x 768 resolution, but at 260 dpi would fall short of the iPhone 4's retina display. That device sports a 326 dpi screen. However, it could still be a retina display, however, as the definition that Apple marketing has used is based on a distance from the screen to a person's eye.
Apple's definition for the retina display (which many have called overblown marketing statements) is over 300 dpi at a distance of 10 - 12 inches. Since an iPad would typically be used at a greater distance than an iPhone, it could still be claimed to be a retina display (assuming, of course, you believe the marketing).
The "x2" increase for the iPad 2 makes sense for a number of reasons; not only did the iPhone 4 get its resolution doubled in both directions from 480 x 320 to 960 x 640, version 1.1 of Apple's iBooks application seems to have accidentally included some bitmaps that would perfectly fit the "x2" theory.
Apple's iPhone 4 is currently the industry leader in screen resolution. The iPad 2 may break far ahead of its rivals. For example, the Motorola Xoom, best-in-show winner at CES, will have a 10.1-inch screen, but only a 1280 x 800 resolution.
