I suppose you folks in the Hobbit Hole have discussed casting already, but the guy I would like to see cast as Bilbo is James McAvoy. I think he'd be perfect. But he may not want to do it after playing Mr. Tumnus in Narnia and being a hot property after Atonement.
I’ve seen him mentioned for Bilbo. He is very hobbity.
We haven’t discussed a LOT of casting issues... mostly just figuring out which actors might return. Aragorn, even for some bit parts... Legolas too I hope could come back, just to give the continuity to the whole series.
So, if at the beginning of the trilogy, Bilbo looks the same age as at the end of the Hobbit, because of the effect of the One Ring, I don't see why Ian Holm couldn't play him. The filmakers could 'age' him slowly through the Hobbit, to match with the younger, then older Bilbo in the Trilogy.