Here's some more speculation.
The "micro-Nano" as I dub it, could be a screen only front like an iPhone with a 1.7-2" diagonal form factor. The BACK of the device could have the camera but also a touch sensitive scroll wheel mode on the otherwise Magic pad like surface.
That would make the first all surface active Apple product.
The edges would be for the volume control, dock connector (defining the device size), and it would support Bluetooth and wifi. It will support VoIP. That makes it the "micro-iPhone" too.
I hope. I wish. I speculate.
Next year the device will be too small for a dock connector and will interface only with micro-USB.
Rocketman