Intel plans to replace the venerable Celeron E3500 with a Sandy Bridge based one. Celeron E3500 is a dual core 45nm CPU clocked at 2.7GHz with 1MB cache and 800MHz bus speed. It sells for $52 if you buy at least a thousand of them. It fits in LGA 775 socket with its max 65W TDP.
This is a Wolfdale 1M core, something that you have seen in many Core 2 Duo processors, just with less cache.
The new Sandy Bridge will get graphics to Celeron brand. It is not clear if Intel plans to keep the graphics enabled but we heavily suspect that the graphics part will get available with these new parts.
We expect a dual-core at similar or lower TDP and it will be LGA 1155 based, hence the graphics support. It should most likely use H61 chipset based boards.
The transition happens in Q3 2011 and we have no details about the actual specs. Many will be lucky to know that this Celeron will get to 32nm.