I go back and forth on this myself.
My first though was -- that kills the full-screen iPod. It would compete with the iPhone, at least for some people.
On the other hand, there's a large percentage of folks that will never buy an iPhone. They have a phone they love. They hate Cingular. They just want an iPod, not a phone, etc. Whatever. On the other hand, they do love the other features of the iPhone, and would buy a widescreen iPod.
I'm still not convinced that Apple would release it before the iPhone. That would certainly canibalize iPhone sales, wouldn't it?
If they do release one, however, I will certainly get one...