Businessweek's Cliff Edwards speculates that Apple may introduce a touch-screen iPod nano in time for the holidays. He bases this prediction on analyst expectations and other recent whispers, but also reports that he saw a similar device in the wild:
Out in the wild the other day in San Francisco, I saw a guy whip out and change his music on a black touch-screen device that looked suspiciously like an iPhone, only smaller. Apple often has key employees test new devices for bugs before rolling them out, so its not out of the question.
Apple is widely expected to revamp their iPod line in the coming months with talk of a taller version.