That looks old... as in prototype for the iPodTouch that corresponded with the iPhone 3GS.
I wonder what choice iPod Touch will make...
On one hand... the new iPad. Often criticized for being a huge iPod Touch itself... will it come into line between the two, as a size variance? iPad and iPad nano (in place of current iPod Touch), with faster performance, and fuller features, and more memory...
and then both iPad big and small get cameras.
or on the other hand, does iPod Touch stay more closely tied to iPhone, with a new less tapered and rounded design... and stay the red-headed step-child of the mobile device lineup.
Frankly, I think iPhone is quite good enough to stand alone as a smart-phone design with capabilities in common with the ipad, but a different visual aspect to the device itself.
I think an iPodTouch->iPadNano transference would be good... unibody matte aluminum back, and all. Full 16x9 high resolution small screen similar to the new iPhone's screen, and a uniform bezel edge like the iPad. Stereo speakers instead of a speaker and mic (but still mic capable, and control-signal capable through the headphone jack for enhanced headphones with inline mic and control buttons... for network gaming, and VoIP, internet chat, etc.), full accelerometer controls, with GPS and compass for navigation and augmented reality apps overlaid on live camera feed to the screen, with picture and video recording like, or better than FlipVideo, and other similar devices...
The iPad would be the big device that is easy to read, easy to use, and not so restricted on screen real-estate... with the iPad nano version being the version that is portable to fit in your pocket, and does all the same things on a small screen, if phone functionality is not what you need. (some people, especially kids, don't carry phones necessarily, other folks carry separate phones, smart or traditional cellular, in addition to a device like this...)
Such a device would consolidate a digital music player of course, as well as GPS/NAV handheld, nike+ compatible pedometer, a portable gaming system, a mobile internet terminal, a digital still and video camera, a PDA, a bluetooth audio source, an accelerometer-based performance-measuring data logger, and tons of other things, all in one device. With a dock-dongle, who knows... it could be a full-duplex RF walkie-talkie, or lots of other versatility, as well...
If iPad is channeling a bit of the PADD from Star Trek... these small devices are an ever thinner slice of science fiction away from being "tricorders" as well. Long beyond the portable cell phone being inspired by Captain Kirk's flip-open communicator.
WiFi would be a given... the question is, would an iPad Nano 3G with a micro SIM card have appeal, without being completely redundant with an iphone that does the same, PLUS phone usage, in a slightly different looking enclosure. I would argue... a non-3G iPad Nano, with a 3G->WiFi node device from the digital carrier of your choice, would probably be fine... Leave the SIM cards for the big iPad, and the iPhone.