This could just be another rumor that some fabricated, considering that the only reference is the classic "inside source" or in this case "inside man." But, then there is the fact that they have the info to back it up.

According to a post on the TheAngryPixel blog, an "inside man" told them that Dhruva Interactive has been hard at work, working on Forza 3. Giving confirmation that the third entry in the series is very much a reality and that we should be seeing a proper revealing of the game very soon. Now, that you think of it maybe E3?

TheAngryPixel question the possibility of Forza 3 being distributed on more than one disc, and there "inside man" was quick to comment.

“One way or the other, the core game will be shipped on a single disc. Content won’t be sacrificed… fans will be pleasantly surprised for what’s in store.”