RetroGangster: There is a third one
gog.com/game/earthworm_jim_3d
I think the OP meant a "proper" 2D Earthworm Jim to follow 1 and 2. EWJ 3D isn't all that bad, in my opinion, but unfortunately it suffers from the same "let's jump into the early 3D" bandwagon of games from that era, which ultimately did more wrong than good to some franchises, Earthworm Jim included. The 2D EWJ games were beautiful and amazingly animated, at the time it really felt like you were playing a cartoon instead of a video game -- they looked *that* good --, but then the 3D title came along and, despite actually being a good game, it lost the brilliant animation and fluid gameplay just in order to "be 3D", and traded those things for a 3D environment with clunky controls and weak early 3D engine that made the otherwise great artistic direction of the series look ugly as hell. So, yeah, I take it that when people talk about a third game in the series, they mean a new 2D (or perhaps 2.5D?) title in the vein of EWJ 1 and 2.
As for there being an Earthworm Jim 3 game... I highly doubt it. The creative minds behind it have all gone their separate ways, Shiny is no more and who knows who the hell owns the Earthworm Jim copyright. these days... as for Doug TenNapel, as much as he did a great job with the series, he was lucky Armikrog got funded after his bigotry controversy, and I highly doubt people would back a second crowd-funded game in which he was involved, even if it was a new 2D Earthworm Jim. Maybe if other creators other than him were the *only ones* involved.