We already knew the PS4K was real, but this is the first mention of just how soon it's on the horizon.
According the the report, the new console will feature "ultra-high definition resolution graphics" and is looking "to capture gamers willing to pay for a richer gaming environment, including a high-end virtual-reality experience." As the PlayStation VR is running on PS4 hardware, this suggests that the impending VR boom is the impetus for this confusing half-generation hardware update.
On the plus side for current PS4 owners, the Wall Street Journal reported "it is likely that the current model and the coming one would share the same software catalog," so you won't have to buy a whole new console to play upcoming titles.
Probably the closest thing we've seen to this sort of mid-generation hardware upgrade is the New Nintendo 3DS, which Digital Foundry just compared to the original model. In that case the newer SKU was clearly a noticeable upgrade, but it didn't leave the previous hardware owners in the dust either as precious few titles are exclusive to the more recent model, and newer games still perform acceptably on the original platform.
The question comes down to pricing. Will a more powerful PS4 bring down the price of the current model, or will this be an "elite" system at a premium price point? Given that Sony is planning to announce the new hardware before October - presumably at E3 in June - it's not unlikely that we'll see the PS4K bundled with PlayStation VR. Now who wants to guess how much that'll be?