Here are the Sonic related bits in the new Nintendo Official Magazine UK interview with Yuji Naka:
NOM: So can we expect to see Sonic on DS anytime soon?
Nak: Yes. We are at this moment working on a Sonic title for the DS. But because there are a lot of things you can do with the DS like 3D, two-screen games and so on, it will take a bit of time.
NOM: Cool! Can you tell us a little more about the game? Does it have a name? When's it going to be released?
Naka: Maybe you'll find out at E3 [laughs]. We'd like to show it at E3.
NOM: In playable form?
Naka: Yeah.
NOM: Going back to the Sonic game you spoke of earlier, is it related to the Sonic touch screen demo we saw at E3 in May last year? Or is that demo a seperate project that we may see more of soon?
Naka: Yes, they are related.
NOM: So it expands on what we saw at E3 last year...
Naka: It doesn't expand from the demo. More like the demo is just one aspect of it.
NOM: Nintendo has had Mario racing go-karts, playing tennis and golf, and now baseball. Sonic keeps quite a straight profile. Is is possible that we'l see Sonic broadening his horizons on Nintendo in the near future?
Naka: Sonic mostly runs, but it's not intentional that he has not done different types of games. That's just the way it has happened. But there are mobile phone games with Sonic playing tenins and soccer and stuff, so it is possible that we'll do more games like that.
NOM: In the days of the Super NES and Mega Drive, Sonic and Mario were huge rivals. Could they ever be in a game together?
Naka: There is a possibility because when I speak to Shigeru Miyamoto, we often toy with the idea. We always said it would be cool, but because of development timing, it's never actually happened. But yeah, it's very possible. When the time comes...
NOM: Wow! C'mon tell us... have you had any early ideas on how it might be done? Maybe in a racing game, or Sonic being in the next Super Smash Bros.?
Naka: Imagine Sonic in Mario Kart. Obviously Sonic wouldn't need a kart because he's so fast he could just run [laughs]. In that sense, you can imagine how hard it would be to fit them in a game together.
NOM: Yeah, they are vastly different...
Naka: Exactly. We'd have to REALLY think about how we'd put them together otherwise these two characters would completely destroy the game. So when Miyamoto-san and I speak, we usually decide that seperate games are better. And that's why we've never gone ahead and made the game.
It wouldn't be that difficult to make Sonic show up brieflyin a Mario game. But if Mario and Sonic were to be in a game together they should really both have starring roles, like a Mario vs. Sonic sort of thing.
NOM: So they would never appear as allies, for that sense of irony?
Naka: That would be alright, but I've always imagined a game of rivalry... like Alien vs. Predator [laughs]. Anything's possible...
NOM: What are Sonic Team's plan for the GameCube in the future?Will you continue to develop for the GameCube?
Naka: We're working on a new Sonic game.
NOM: So can we expect a sequel to Sonic Heroes or something with a totally new spin?
Naka: It's a totally new Sonic game. <My opinion: Yay, and nay. Yay, no SH2, nay, no SA3> You'll have to wait until E3 to find out more.
NOM: Will it be playable?
Naka: Yes.
NOM: Fantastic! How far is it in development? How soon can we hope to see it in the shops?
Naka: Within 2005. We'll reveal more at E3
NOM: It's a long time since the last NiGHTS game. Will we see anymore of NiGHTS?
Naka: Y'know, everyone I speak to asks me that question, so I'm basically feeling a lot of pressure to make a NiGHTS game. The more people who ask the more I feel pressure. If I make another NiGHTS game I can't afford to mess it up. It makes me nervous.
Many games get sequel after sequel - it drains the life out of all the original ideas. We have to be careful with NiGHTS - its sequel will have to be perfect. If we make it, it will take a bit of time to get it right.
NOM: So maybe we'll see NiGHTS for the next generation of consoles?
Naka: Maybe.
NOM: Nintendo often lets outside developers make games based on its key characters. Would Sonic Team consider letting a Sonic or NiGHTS game be published out of house?
Naka: We have used outside developers before, but not with NiGHTS. Outside companies have approached us with proposals for new NiGHTS games. But obviously, because of the pressure to make it good, we have refused them. If a new NiGHTS game did happen, it'd be developed internally.
It will be very hard. With the first NiGHTS, we had to think about every detail in the game to make it perfect. If we were to make another one, it would take a long time.
NOM: Phantasy Star Online is major title in online games. With the first Dreamcast game, Sonic Team embraced the possibilities of online play. What's happening with the PSO series now?
Naka: I want to keep the Phantasy Star Online series going. We've got Blue Burst (a remake of PSO Episode I & II) coming out on another format later this year. There's nothing in the pipeline yet, but there will be more of PSO in the future.
source
boards.ign.com/Sonic_the_Hedgehog/b5224/78869758/?10
... However I have never had liking for mario 
From where you took this news? 
Then again, it sure sounds a lot like that Smash Bros. game we've all been wishing for, doesn't it? Maybe they've listened to a lot of the fans' desires, just as they're planning to do with the Sonic The Hedgehog Poll. It's only a conjecture of mine though. 
