Gizmodo claims to have a video from a updated iPod with firmware that allows it to display Coverflow. A somewhat convincing video accompanies the article. (Youtube link).
Gizmodo has historically been very liberal about posting Apple rumors in the past, and despite the video, leaks from Apple have never previously come in the form of video footage.
The site claims that the update will come soon in the form of a firmware update and not to expect any new-generation iPods before the iPhone debuts.