Confirmed from the Official Google Blog, looks like another OS aside from Android is in the works from Google.  It is supposedly aimed at netbooks with Intel Atom and ARM processors. Google says that it should be out in the second half of 2010. And yes, it is based on the Linux kernel.

Some of the highlights from the Article:

“Speed, simplicity and security are the key aspects of Google Chrome OS. We’re designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds. The user interface is minimal to stay out of your way, and most of the user experience takes place on the web. And as we did for the Google Chrome browser, we are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don’t have to deal with viruses, malware and security updates. It should just work.”

View the full article here: http://googleblog.blogspot.com/2009/07/introducing-google-chrome-os.html