It's starting to look like Sega really is shutting down their hardware production, as some reputable outlets are reporting similar news. The first tidbit comes by way of Reuters Japan, who have a story up that says Sega will announce a major restructuring next week in which they will reveal that they are working on Playstation 2 games, and that they are considering the Xbox as well. This story has been denied by Sega, but FGN Online is reporting that a major announcement is coming next week. Finally, what looks to be the nail in the Dreamcast coffin is over at MCV where they are reporting that Sega is "killing off" the system, and that they are already working on five PS2 games and two for the GameBoy Advance. They also say that Sega will continue to market the system until their current supply is exhausted (thanks to The Shugashack for the tip). Update: Sega of America has issued this statement, which seems to contradict these reports:

Sega of America stated today that the company globally reaffirms its commitment to Dreamcast. In fact, Sega has more than 100 games worldwide coming out for the platform in the next year. It is not Sega's policy to comment on rumors and the company has not made any statement regarding ceasing manufacturing of Dreamcast or development for other videogame platforms.