I don't think the iBook is going above 1 GHz with the next update, because the 12" and 15" G4 PowerBook can have a 1 GHz G4 (although the 15" can also have a 1.25 GHz G4), especially since the iBook has a G3 in it.
Even though Apple has touted the megahertz myth as just a myth (which it is), it still exists in the minds of consumers.
If you point to the iMac, that is a different story, because then you have to compare it to the PowerMac, between which there is now a significant gap in performance. Having the iMac with a faster processor than the PowerBooks is not a problem, because the PowerBooks exist because of portability.
I don't see the iBook being upgraded to a G4 either, since that would really cannibalize 12" PowerBook sales. The 12" PowerBook is kind of like the G4 iMac of the desktop line -- it's sandwiched between the powerful 15" and 17" PowerBooks, and the awesome price/performance ratio of the top-of-the-line iBook which is rivaling the 12" PowerBook in pure performance. The iMac was similarly sandwiched between the PowerMacs, and the awesome bargain that was the eMac. Now that the PowerMac has gone G5, the iMac has a ton of room to grow without encroaching on the PowerMac.
So, aside from maybe a graphics card update, a jump to a 1 GHz G3 with 1 MB L2 cache (perhaps), AirPort Extreme support, maybe a slot-load optical drive, and perhaps a modest price decrease, I don't see the iBook getting a significant update anytime soon. Although, all in all, that wouldn't be half bad as an iBook update.
The iBook will see a significant update only after the PowerBook line goes G5, IMHO.