Color screen would be awesome.
Album artwork, a better browser (not entirely text base), stay on top of the market.
Also for contacts, weather, calendar, driving directions etc. That you download to your ipod (pod2go) it would be a great asset for me. Cause I have my ipod connected to my computer at all times, then I pop it off when I goto a job interview, movies etc. And having it capable of displaying the map would awesome. Also icons for a Five day forecast.
It is definitely not impractical...
Also it would definitely NOT decrease the battery life! The backlight on the current ipod is more than adequate for a color display. And the color itself wouldn't require any more battery power. In fact some of the competition with color displays have way way better battery times.
Of course more than a color display I would like to see the ipod last through a weekend outting without needing a charge.
Next I would like a video output so I can see my playlists and browse through my tracks on my Car's in dash LCD, it's rediculous trying to look at that tiny display in the car to get to the artist I want (40gig ipod) If it was on the screen of my car even mirroring the same browser built into the ipod it would be much easier.
We all know the ipod will eventually have a color screen... it's inevitable, why not get it in and out of the way so they can start working out all the kinks.