The touchscreen iPod, which at one point was the hot rumor in town before the iPhone stole its thunder, is in development and will be on store shelves in a matter of months. The next generation iPod will likely include all of the features of the previous iPod, but with a touchscreen interface.

Hopefully they'll think about increasing the storage capacity. They ran short of the 80GB models during the previous generation, and I don't think even that will be enough considering that they can store and play movies. I'd like to keep a large collection of movies (like 500+) on one device, and this just might be that device if they can get maybe 120GB of storage in it.
AppleInsider | Multi-touch video iPods to arrive in August - report