James Cameron recently revealed how he would like to approach two sequels to Avatar:
"Our plan right now is to do two and three as a single large production and release them a year apart," says Cameron, "In order to do that, we have to refine our technical processes beyond the end of where we were finishing Avatar one a year ago. We need to future-proof ourselves out five or six years to the end of the third film."
Cameron is also circling Cleopatra with Angelina Jolie. If he chooses to do that project, he'll have to make it before the Avatar sequels since he wants nothing to interrupt his work on them.