It would work more like the Sirius S50 device. the actual unit would be a regular iPod any iPod...you would then dock it into a Sirius dock either in the car or at home... the Dock holds the Sirius satellite receiver so you could only listen to LIVE Sirius on the iPod when connected to the dock. iPod form factor would remain the same.
Cool thing is you could record Sirius content to the iPod to listen to at a later time... think of it as TIVO for Sirius.
I think this sort of partnership would be great for both Apple and Sirius... Apple wouldnt have to change the iPod hardware/form factor at all, it would just require software to control and display Sirius information when connected to the Sirius receiver dock. and Apple would sell more iPods!!!!
It would probably be the best device to buy for people who are looking to get Sirius... plus Apple would have another number to yell from the mountain tops...we have brought in 5million subscribers to Sirius since the launch of the iPod/Sirius dock!