I think Apple WILL make a touchscreen eReader/netbook/insertcatchyname and introduce it this year or early next year. The writing is on the wall. They've learned a lot from the iPhone/iPod Touch. There is money to be made with the new device.
I would think that it could be a major force in the eBook market, but not how it currently is. Imagine if you were in college and you could get your textbooks through iTunes? If your art history book had Quicktime VR images of museums and sculptures that you could view. If you could make a note within the book.
It would be a waste if this is all that the device did. I would think that it WOULD run Mac OS X: Snow Leopard as well as possible running iPhone apps. I think that this device NEEDS to run the full-fledge Mac OS X for several reasons, but one major reason: massively increased Mac OS X marketshare to be gained.
A good price for this device would be $699. Between $600 and $800, anyway. Any less is too cheap and would make the high tier iPod Touch look too expensive. Any higher would be too close to the MacBook, and would make the device look really overpriced...though people would still get it.
I don't care what anyone says, the iPhone/iPod Touch isn't a "netbook". It's a very good device, but it doesn't replace a laptop. This "iTouch", "MacTouch", "Touche'", or whatever Apple calls it will be it's own device.
I'd also imagine that this device could possibly have a Mini DisplayPort connector, allowing you to connect it to Apple's displays and use it as a keyboard, while being the computer.
I'd love for this device to have haptic feedback and iSight built in, but lets wait and see.
I do know one thing. When this thing is released, the internet is going to explode, meaning people commenting on it lol.
