Multitouch could have the clickwheel "in the pocket" usability (concept)
I do not have an iPod Touch or iPhone (can't justify the expense at this point either), but based on the posts that I've read here so far this is my idea (and this might be an idea that has already been implemented or discussed before, so forgive me if it is).
(My influences are the following:
Chronos Timer, which has one of the simplest interfaces ever constructed: Just 3 buttons allow you to move through dozens, maybe hundreds, of functions and modify the clock to nearly any time control that you could desire - it just involves knowing the shorthand notation for some of the different methods.)
While holding the home button and pressing the touch screen with one or two fingers and either holding or quickly tapping, someone could move through songs or fast forward/rewind. For example, Home + One Finger, Quick Tap could move to the next song while Home + Two Fingers, Long Hold could rewind the song. Potentially a "Hold" could be replaced by a sliding move, but this would be harder to do if you're walking.
This would allow a person to use the multitouch interface without having to take it out of their pockets, essentially providing the ease of use of a click-wheel provides, a major sticking point that makes many people consider the Touch an inferior player. Other gestures wouldn't be needed since it's not possible even with a scroll wheel to competently maneuever through menus or really do anything other than go forward and backward through a playlist or fastforward/rewind through a song. Also, implementing other gestures would likely involve moving your fingers in patterns or across the screen, which would be harder to do if you're walking, which would cut out the majority of time that the gestures could potentially be useful.