Is this the week that Amazon will launch its much anticipated newspaper and magazine sized Kindle? The New York Times is speculating yes. That would push up the date two quarters (from the Q4 09 announcement Amazon itself made). The question, though, is will it be enough to save newspapers hit by the double whammy of the recession and the migration to free content via the Web.

Amazon, News Corp, Hearst, and Plastic Logic, are all working on tabloid-sized e-reading devices with anticipation being high that Amazon’s current Kindle model of charging readers for newspaper subscriptions could be applied to the other devices to help beef up sagging bottom lines. Newspapers selling on the current Kindle, including The New York Times, The Wall Street Journal, The Washington Post and USA Today, would be the first to benefit from larger format devices.

The Times charges $13.00 a month for access; The Journal is $9.99. Updates are daily via the Kindle’s cellular connection.

We’ve written about the Kindle several already. In one piece, we suggested that even if The New York Times bought every one of its subscribers a Kindle, by killing its print run, it would come out ahead by some $346 million. We also reported that the Times could be earning as much as $1.6 million from Kindle sales.

There are shortcomings in the current display technology – as good as e-Ink is for reading books, it may prove to be unsuccessful for newspapers. E-Ink currently is black and white only and can’t display videos, one of the mainstays of the online press.

That gives Apple, which is also rumored to be launching a large-screen iPod as early as this summer, a serious leg up with its full color touch screen display. That also could be the dedicated e-reading device’s downfall: the iPod Touch has a full-fledged browser which would continue newspapers’ current conundrum of not being able to charge for content via a proprietary delivery system.

Yes, an LCD screen is harder on the eyes than an e-Ink one, but an all-in-one device that plays iTunes and surfs the Web may be too much to resist.

Amazon CEO Jeff Bezos remained upbeat about Amazon’s ability to compete with Apple. When asked in February whether he thought the Kindle could help print media, he replied that he thought there were “genuine opportunities.”