It will either happen Monday before the keynote or the following week if not at WWDC. I think it makes sense that Apple either actually releases it at the keynote or doesn't mention it but updates it the morning of or the following week.
I know Apple has said it will not be releasing any hardware at WWDC, but wouldn't it make sense to do it anyways? What I most want to see is Apple messing with everyone due to last year's iPhone 4 debacle; in regards to it being found in a bar and released on the Internet rather than by Apple. What if they are purposely misdirecting people this year and employed the assistance of a few bloggers and reporters to surprise everyone? I would love to see an iPhone 5 at WWDC, and it as well as iOS 5 are the most important factors for me. Lion should be okay, but the only idea that excites me at WWDC is iOS and possibly iCloud if it's cost affordable.
I don't believe any MBA update will bring a more complete Mac to users, so I have sorta given up and just hope that if Apple updates the MBA it figures out a way to introduce something that is all-around better than the Nvidia-based October 2010 MBA. Maybe Apple will have something magical for the MBA and report it at WWDC though, as a release there might mean something better than most expect. Although it's doubtful with the latest model just being so great that Intel's SB IGP could produce any real innovation resulting in a better all-around MBA giving all users a better experience.
If it is the exact same case, display, non-backlit keyboard, and just introduces the CPU gain with loss in GPU and Thunderbolt, most will be much better off just buying the clearance models from October 2010. The current MBA is amazing, and to see the discounts available is great. However, maybe Apple will truly surprise us with a better graphics solution, an IPS display, a backlit keyboard, double the RAM standard with 8GB available, double the Flash storage, and etc? I doubt I will buy the next MBA unless it includes several of these alternatives. I have owned every MBA version to date, and this is the first time I am not looking forward to the MBA update as it doesn't look to be an upgrade.