I'm pretty sure Pixar had always intended to make it a trilogy - the problem was that another Toy Story sequel wouldn't have counted under their set number of films under Disney distribution. Disney had been working on their own Toy Story sequel which was abandoned with the merger with Pixar.
If Pixar stick with the rough idea from the DVD extras of the Toy Story film, it should be a decent end to the series.
Pixar have yet to make a bad film and Toy Story 3 has good people working on it. Even Cars which a lot of people said was average, I found to be surprisingly good, especially when compared to the huge number of really poor CG films that were released last year...