I'd say there's no chance at all that the iPod touch is on it's deathbed. It's the iPod classic that should look out. The iPod touch is the only iPod with a full iOS interface, and is still a very good iPhone alternative. Some people, believe it or not, don't want to pay for or don't need the abilities of the iPhone (e.g. tweens/teens/people who only want a cell phone for the phone, etc.). Heck, I'm 21 and I like my dumbphone for it's amazingly long battery life and it's bulletproof construction. I don't have even have texting! I don't feel like I'm missing out! Well, maybe every now and then I do, but it's not often... I'm old school like that! I even use fountain pens!!!
I like my iPod touch for being an iPhone without the phone. That being said, I'll probably get an iPhone later this year, but only cause I'll need a new cell phone, and because I'm moving cross country and will finally appreciate what I can gain from internet everywhere, and having GPS abilities, etc. And I'll be making buckets and buckets more money than I do now.
I think the iPod touch was just stuck in a rut for the past year, kinda like the Mac Pro. They could've added a few things to it, like a doubling in capacity, or GPS, or high def video/better camera, but nothing really was ready obviously to put into it, like how the only real upgrade to the Mac Pro really could've only been some GPUs or thunderbolt. All else they're waiting on Intel. 2012 should be a big year for both, I'd bet. Hopefully they ditch the chrome back and make it shaped like the first iPhone or the current gen iPhone but with brushed aluminum. That'd be nice. It'd allow a better camera, better battery, more room inside for the more integrated circuits, etc.
