In the end, it costs more than some smartphones, and those can still be used as a music player – so Apple will have to make sure that the new iPod Touch actually offers something interesting that can set it aside from the other similar products on the market, and more importantly from smartphones.
They seem to be upgrading the design of the device significantly, adding various good new features such as water resistance – but those are more of a gimmick in the context of the bigger picture, so Apple should make sure that they have some additional ace up their sleeve with the design or features of the new iPod Touch.
Some have speculated that it would introduce interesting new software features, but there is no word on what those could be. On the other hand, the device might also come with a significant boost in its memory capabilities, a feature which would definitely be attractive to music fans and would bring the device back to its origins when iPods were quite large in size.