I see multiple differences and reasoning behind this new model iPod:-
1. Close to WWDC, and the previous generation would not be able to handle iOS 7 due to its slower hardware, the screen was smaller, and was not an IPS display. Now this new iPod touch has the same iPhone 5 / iPod touch screen as the current generations, and the same hardware as the current iPod touch range with the rear camera.
2. Camera on rear was removed to make it cheaper, and possibly thinner and lighter. This also fills the game as the 4th generation of iPod with the chrome back is not longer available. The pop up strap hook has also been removed as well.
3. Notice on the this new iPod touch the power button and volume buttons on the side are now black, instead of silver on the current model iPod touch with rear camera. This breaks up all the silver especially along the metal frame around it - I like this.
4. The Apple Logo on the back appears to be Black as well, no more shiny mirror surface for the logo.