Below is a 24 second clip of an Apple device, with a camera, being shown off on video (fittingly, video taken by an iPhone). iPod touch rumors have been spreading for weeks regarding an update that introduces a camera to the high-selling portable media device. Though the idea did not originally make too much sense, this may be Apple’s retaliation to AT&T’s continual mishandling of the iPhone—creating a nearly equally-featured device that many could use instead of being tied to AT&T and the iPhone. This, however, seems ludicrous, leaving the only real logical possibility—there is nowhere else for Apple to go with the iPod touch line without seriously detracting from their iPhone sales.
Though it now seems this third generation of the iPod touch is very real, the final truth will only be announced at Apple’s still-rumored, but largely-expected September event.
Hit the link for more (convincing) images of the photograph-taking iPod touch.
Pictures [covinoandrich]
I don't think a camera will lower sales of the iPhone. I don't think Wi-Fi alone will ever compare to having permanent connection via Wi-Fi, 3G, or EDGE where ever you are (within reason of course). Of course the new 3GS has the compass which works flawlessly with Google Maps (well, it has done for me), which I have used when I am walking cross-country, and voice commands (perhaps the new touch may have this too?). It will be interesting to see how the touch develops.
I really wish they'd do something with the AppleTV though- seems it's getting left behind everything else and it's now looking out-dated.