The Inquirer is claiming that Organic LED (OLED) displays may be used on next generation small-sized iPods (Nano and/or Shuffle replacement). This rumor is not necessarily new, as ThinkSecret reported in May of 2003 that Apple was considering OLED technology for iPods and possibly displays.
OLED displays draw significantly less power than traditional TFT-LCD displays used in current iPod models, as they do not require a backlight (each pixel directly emits its own light). OLED contrast ratio's are generally considered far superior to LCD displays because the pixels can display true black when off. However, OLEDs are not well suited for outdoor use, and have a limited lifespan.
For more information on OLEDs, see Wikipedia.