MacRumors.com

Image courtesy of iFixit
Another interesting possibility found in iFixit's teardown of the third-generation iPod touch was an empty space on the circuit board that could house a camera. The location is consistent with the location of the rumored iPod touch camera and is distinct from the previous-generation iPod touch design.

Pictured above is the second-generation iPod touch on the left and the third-generation iPod touch on the right. The round metal piece seen in the middle of the second-generation iPod touch board is actually an antenna cable socket which has been moved on the third-generation model, which only has a black plastic spacer in that place. According to iFixit, an iPod-nano style camera would fit in that location.

The finding is also consistent with a report from AppleInsider which claimed that the iPod touch with camera was a real product but had been scrapped about a month ago. The rumor site also believes that Apple is still planning on adding camera capabilities to the iPod touch in the near future.