Robert Novak thinks it's likely:
His tenuous 13-year relationship with the Republican Party, following his retirement from the Army, has ended. The national security adviser for Ronald Reagan left the present administration bitter about being ushered out of the State Department a year earlier than he wanted. As an African American, friends say, Powell is sensitive to racial attacks on Obama and especially on Obama's wife, Michelle. While McCain strategists shrug off defections from Bruce Bartlett and Larry Hunter, they wince in anticipating headlines generated by Powell's expected endorsement of Obama.
Hmm, I wonder who Novak's source is for this: Richard Armitage?
Meanwhile, Mark Halperin provocatively floats the notion of Powell as the Democratic convention keynote speaker. Makes sense to me: I'll see your Lieberman and raise you Powell.