Dredging contractor Jan De Nul announced back in December 2006 that Nakheel had awarded them a new contract for a new island - called New Island!
It's to be reclaimed 50kms out into the Gulf in 20m deep water and is to be crescent shaped.
Apologies for the poor image - it was taken from the Press Release pdf. In the top left you'll see where the island is going to be located way out into the Gulf and off the Jebel Ali Palm.
In order to be built, the island will require:
~ 3 dredging vessels
~ 1 stone dumping vessel
~ 1 positioning pontoon
~ 29 million m³ of sand
~ 3 million m³ of rock
~ US$115 million (422, 380,000 dirhams)
~ 27 months to complete
Work started on the project in December 2006 and, according to the JDN Press Release, the island's "primary function is to provide shelter for recreational vessels".
So far, the project isn't showing on the Nakheel website.
The Jan De Nul Press Release can be found here.
According to this Wikipedia entry which records the claimed distance, 50kms puts the island outside the UAE maritime contiguous zone. Also see this report which defines the continental shelf boundary between the UAE and Iran.
All this effort and money for a shelter island?
Did I hear someone say casino? (Just a hunch!)