How do you figure? It's every bit as useful as the iPod Shuffle, with the same music storage ability, and does considerably more.
If the Watch weren't so expensive I would say that it would easily replace the Shuffle. As it is, I'm not sure it won't eventually replace the nano once it drops in price and gains more storage?
I expect the iPod Touch to be around a couple of more years, replacing the Classic for storage, probably adding 128gb option this year. If the iPhone 7 adds a 256GB model, then the Touch will be history.
So I figure 2 years life left for the iPod line, except for the Shuffle which may linger on indefinitely as a low-cost entry-level alternative for people who haven't bought the watch, and don't like to carry their iPhones to run and workout.