According to The Digital Bits, the reason why the release of the Dune: Extended Edition is delayed is because David Lynch has decided to be involved with the release of the DVD.

When the film was first released people were unhappy because they felt the movie was too short. Yet, this was the version that Lynch himself approved. Over the years the film has gone through numerous recuts and different versions have appeared on both video and DVD.

Dune: Extended Edition will include both the original theatrical version of the film and a new "director's extended cut" to be edited by David Lynch.