I personally love the Classic, as I have the 7 Gen 160GB. Before asking yourself if they would come out with a new version, you have to ask yourself, "Why? What could they improve upon?"
1) The classic is as elegant as it could possibly be. It doesn't have too much, it doesn't have too little. It's functionality is perfect for what you would want the classic to do. Otherwise, you would begin to encroach upon the touch.
2) If space is your issue, re-evaluation on your behalf might be necessary. Apple's thought process is that 'Less is More'. They want to instill this onto their customers and build upon the culture it has established. Apple would not want to give you more memory because it is not necessary. I bet you only listen to a mere fraction of that 120GB.
Simplify, Reduce, Enjoy.