iLounge speculates that...

iPod nano 5G, Next-Gen iPhone Design Changes Revealed?

We've seen both this rumor and also one that says the 3rd generation iPod touch will add a camera. The 4th generation iPod nano and 2nd generation iPod touch both have decent voice recorder ability when combined with a supported headset-mic combo like the two in-ear earbuds Apple released late last year or the iPhone earbud-mic. So, adding a camera with, I hope, video recording would complete these iPod's multimedia capabilities. The iPod nano's small size and up to 16GB capacity would make it a formidable digital camera option for many people.

iLounge also notes that their source reports that the 5th generation iPod nano will still have a clickwheel. I'll be very happy if that is true because touch is NOT the best user interface in all cases. In my opinion, the clickwheel is still a better solution for one-handed use with minimal visual interaction.