Trademark & marketing considerations
From a trademark perspective, Apple would have to think long and hard before creating an extension of the iPod trademark. The more that they play around with the name the more they undermine their claim over it - quite an issue when it's rapidly become a generic product category descriptor. For this reason, mPod, ePod, miniiPod etc are all, in my opinion, unlikely.
Smaller and cheaper is a smart post-Christmas move, since demand will be slackening off in the post-gift-purchasing season. Pre-Christmas, a smaller, cheaper iPod would undermine higher-margin sales. Post-Christmas, a smaller, cheaper iPod could boost slower sales.
Apple also needs to create a price-breakthrough in order to remain competative and maintain their market leadership - I anticipate that the new low-end iPods will be smaller in disk-space, not physical dimensions, and very price competative. They will feature a hard-drive and Firewire/USB2 since anything else would undermine iPod's simplicity.
I think the big annoucement will be the licensing of Apple's DRM Fairplay technology to third parties such as Napster, enabling 3rd party music download sites to provide iPod support. This way, Apple will leverage their market domiance to finally give Microsoft a kick in the teeth - if they licence Fairplay under the right terms, it could have enough industry support to give WMP a run for its money. Since iTMS is effectively a loss-leader, Apple need not be too concerned about allowing third parties to compete directly with iTMS, and since iTMS is currently the best-of-breed, it can doubtless handle the competition.