Another interesting possibility found in iFixit's teardown of the 3rd Generation iPod Touch was finding of an empty space where on the circuit board that could house a camera. The location is consistent with the location of the rumored iPod Touch camera and is distinct from the previous generation iPod Touch design.
Pictured above is the 2nd Generation iPod Touch on the left and the 3rd Generation iPod Touch on the right. The round metal piece seen in the middle of the 2nd Gen iPod Touch board is actually an antenna cable socket which has been moved on the 3rd Gen iPod Touch, which only has a black plastic spacer in that place. According to iFixit, an iPod-nano style camera would fit in that location.
The finding is consistent with a report from AppleInsider which claimed that the iPod Touch with camera was a real product but had been scrapped about a month ago. The rumor site also believes that Apple is still planning on adding camera capabilities to the iPod Touch in the near future.
Article Link: Apple Still Planning Camera in iPod Touch?