A few thoughts...
1,this ipod isn't being made for most of us. Apple is not trying to reinvent the (click) wheel here. They are targeting a specific kind of user and most of us have our 3G,4G ipods are are happy....great...but Apple obviously feels there is a segment not having thier needs met. This ipod is for THEM....not US.
2,maybe Apples selling point is simplicity. A ipod that you load up and go. No fancy features,no games,no bulky player weighing you down....it's all about the user and his/her MUSIC.
3,this ipod is for two types of people. The gym rat who wants something small and light they can strap to thier wrist or place in a pocket in thier shorts and have music and just music. The other is the person who just wants an 'ipod' w/o the cost or 9,000 songs with them at all times. Simple,cheap,easy and 'does the job'. End of story.
4,I had an iriver and with a screen I often never used. 2 times through my library I knew more or less where my favorites were and could flip to them w/o looking at a screen. I have a Sony mp3-cd player with a screen. That 2 line screen is worthless and I often never bother with it.
5,one factor is how this ipod is made. Small,light,flash memory=no moving parts=more durable for active people. The other is what it will be used for. Load up 50 of your most rocking,thumping songs and head to the gym for your 60 minute workout. If you want your entire Metallica library with you at all times or to be able to sort through your 20 hours of Rush Limbaugh shows...BUY A REGULAR IPOD! This ipod wont work for you because it wasnt made for you.
6,if this ipod is intended to be a workout companion,wouldnt a screen just get scratched all to hell anyway? Case you say? Adds cost and bulk. Also,who wants to be pulling out thier ipod every 10 minutes to look thru songs when you are on a treadmill or basketball court?
7,Belkin. Apple has to leave something out so Belkin can chime in with thier $90 3 line LCD remote/headphone combo.
8, capacity. If you have a 100 song playlist that is strictly your 'pump me up' gym mix,if you workout 3 times a week for an hour each time,you likely would not get sick of your music too fast and so a 200+ song capaicity will likely be more than enough. Plus,if those are the songs in your library that you enjoy while exercising why would you need to change them that often anyway?
If this ipod concept upsets you then just realize this ipod is about as 'for you' as maxi pads are if you are a guy. This ipod wouldnt work for my needs but it is EXACTLY what my girlfriend needs and that is likely whats behind Apple's thinking.