What the Air needs, and is long overdue for, is a ULV i5.
There are ULV i5s. That isn't the issue. The issue is that making that graphics tradeoff appears to be something that Apple doesn't want to do.
There will be some next generation i5s when the Sandy Bridge versions drop next, but that won't be until next year.
There are also not nay more of the small package format C2Duos for Apple to go to with the MBA. The new MBP 13" picked up "hand me down" CPUs that had be used in higher end models. The MBA was currently shipping with the fastest implementations you can get in that package sizes. Intel is highly unlikely to introduce new C2D of any package size so they are stuck. The option is releasing a new model with no CPU improvements with mostly graphics and size improvements. There is a decent chance that is what is going to happen.
However, this arstechnica post from a few months ago makes a compelling argument that Apple has no decent upgrade options, due mainly to the Intel / NVIDIA battle.
There is no Nvidia battle . A variant of the 320m would
not well with the Core iX models even if Intel had licensed the updated DMI bus. The DMI bus is far too slow for graphics traffic (given its other nominal workload traffic ) and the memory controller would
still have been inside the Core iX chip. Integrated graphics isn't practical if the memory controller isn't on the same die as the graphics. The "bus licensing" thing is moot and a distraction.
Nvidia didn't want folks to notice they have no x86 answer for the upcoming CPU+GPU fusion. They don't. Claiming Intel is an evil meany just diverts folks attention from the facts. All the Intel and AMD graphics haters just need to get over it. Nvidia is pragmatically blocked from entering that market. The PCI-e is how connect faster graphics to Core iX solutions and that requires a discrete solution. The problem as outlined in the article is that blows up the space constraint. (extra chip. "redundant" memory controlles and RAM , higher power requirements, etc. )
The real issue was that AMD didn't have a CPU+GPU option ready to go and Intel's implementation had major problems. Forget Nvidia then had nothing and will have nothing next year too.
Going with a AMD Zacate, if launching along with MBA, will have some tradeoffs too. Hardcore CPU only jobs won't be as fast, but the graphics beats the slop of out Intel's offerings. Also competes well on CPU+Graphics job mix with a C2D + nvidia solution while potentially occupying even less space internally ( which is a good match to the MBA's space constraints ) .