According to a story by website Boy Genius Report, Apple recently finished up the code for iOS 4.3 and it's gone into Gold Master. Gold Master, for those who don't know basically means it's the release version. Developers will get to play with it for a while, and if they don't find any bugs, Apple releases it into the wild.
The good thing about Gold Master versions is that once it's seeded out to developers, anyone else can get the IPSW, because it's no longer locked away. This means you can manually install the build on your iPod Touch, iPhone or iPad (we will post those instructions later if the rumor is true).
Keep in mind, you won't want to update if you jailbreak your device.
Aside from that, know that it doesn't work on some of the older model iPod Touch devices and it won't work on the iPhone 3G. It should give the iPad some interesting multitouch gestures, which will almost make the button unnecessary, which is why we've heard so many rumors of buttonless iDevices.
Perhaps it will be released on or around the official iPad 2 announcement? It's just a guess, but we don't see why that couldn't be the case. It would give Apple the perfect chance to show off how the new touch control features work on the iPad, and this version of iOS does have the FaceTime and Photo Booth software, though they definitely won't be available to current iPad owners (obviously because of the lack of camera) but because Apple tends to release unique builds for each generation device.
You can read what we know about it so far here.