Hate to break it to you...
http://guides.macrumors.com/Image:Videoipodfake_3.jpg
So uh-huh... "Apple should" totally add a screen... and a click wheel... and a world clock and calendar and FM tuner. Then they call it the "Nano mini" or "atom" or "micron" or whatever.
If I am working out, biking, snowboarding, land lugeing, flying, walking or doing god knows what else (activities for which a shuffle is best suited) the last thing I am interested in is navigating a bunch of menus to choose a song. Actually I leave my iPod "face out" in my pocket so I can adjust volume, skip, etc w/out having to take it out (which is one of my FAVORITE features of the iPod and something that no other players can do! -as well)
I hardly ever look at the screen on my 3G iPod. If I am walking or driving I ususally leave it on shuffle and skip forward if I feel like listening to a new track. Yeah it's nice to be able to have a screen just in case I don't recognize a track. However, that won't be as much of a problem on a small 1GB device.
The more junk they add to the Shuffle means more incentive taken away from the Nano. *Plus* a bunch of you have already mentioned how many other 1GB (with screen, whatever) players are on the market right now. Hello... market saturation? We all know how fiendish Apple is about releasing products for saturated markets (hint- they don't).
Remember "Think Different"? Seems to be working for Apple.