According to multiple user reports, Apple is updating their online stores to offer a 1 GB version of the iPod nano.
The information was apparently leaked on the Apple Australia website (image since removed for the time being).
The online Apple store is currently offline for updating as of this posting.
[UPDATE] According to a press release, the nano will now be available in a 1GB format for $149, and pricing for the iPod shuffle drops to $69/512MB & $99/1GB.
The Apple store has been updated to reflect the new models & pricing.
[ Update 2 ]: The iPod shuffle 512MB now sells for $69, and the 1GB shuffle remains at $99.