If you're to believe the rumors (and Apple's own job postings), there's a good chance that the next generation of iPods will be outfitted with basic cameras. There's no telling which iPods will be affected (though the Shuffle seems unlikely), but the folks at iLounge are banking on the Nano.
Personally, I'm not thrilled about the idea of a camera on the Nano. Sure, a Nano cam would be fun, and Apple could have a field day marketing it as one of the thinnest cameras ever made. In most cases, however, the camera on your mobile phone is going to be a lot more useful--allowing you to e-mail, MMS, or upload photos on the go.
Now, putting a camera on the iPod Touch seems more practical. On the Touch, you'd get the benefit of open-ended development from the App store, a larger-screen size than you'll find on most cameras, zooming and editing features, and the capability to e-mail or upload your photos over Wi-Fi.
But just because a camera-equipped Touch makes sense, doesn't mean we'll see one. After all, Apple is laser-focused on upselling people on the iPhone and has historically gone out of its way to give the iPhone the lead when it comes to features (remember when you couldn't even get e-mail on the Touch?). A camera-equipped third-generation Touch would also potentially benefit from the video-recording capabilities included in the upcoming iPhone 3.0 operating system. Somehow, it seems un-Apple-like to jump from an iPod Touch with no camera at all to one with photo and video capture...but I'll try not to jinx it.
An iPod Touch or Nano with a camera still won't benefit from the GPS-tagging capabilities or MMS messaging of the iPhone. One thing an iPod Touch camera could do, which cell phone carriers would never allow on something like the iPhone, is video chat. An iPod Touch with a forward-facing Webcam capable of iChat/Skype-style video communication over Wi-Fi would certainly turn heads and fill an untapped niche in the portable device market.
What do you think? If your iPod had a camera, do you think you'd use it?