They should discontinue the classic and the shuffle, and use the beats purchase as an excuse to increase the audio quality of the Touch and the Nano and give them high-res music support. Like how in the beats commercials Dre says that Beats let you hear the music how the artists intended, then you can too with high-res music on your ipods now. And with only 2 models the Nano will be for basic music playing and Touch is for if you want a full fledged iOS device. And increase the max Touch capacity up to 128 gb.
The iPod business is declining and so it makes sense for them to slim down the lineup. I'm assuming the two worst selling models are the classic and the shuffle. They will probably never do a re-design of any ipods at this point but with streamlining and tweaking the current lineup they can get the most out of a dying product category.