Don't fear. There will absolutely be a new iPod touch soon (probably October) for several reasons. The noncontract and child/youth market is still significant for Apple, and gets users hooked on iOS early. The new graphical and code improvements in iOS only incentivizes Apple to use the iPod Touch as their flagship model for handheld gaming, where users don't have to share a battery with a phone.
Yep, iTouch is still the entry-level drug of choice that Apple markets to kids and younger teens (older teens tend to ask for iPhones).
Plus, I have to question the people that say the Apple Watch will cannibalize sales of future iPod touches. Say what?? They are totally different things!
The iPod touch is marketed to kids and casual mobile gamers, and occasionally people who want to have App Store features (like iPhone) but not wanting the phone contract. Some mobile gadget nerds (who already have iPhones) will use the iPod touch as a 2nd device to simply use as their music player and as a repository for all their music (rather than cluttering their iPhone with all those albums).
The Apple Watch is marketed to rich affluent people who have hundreds of dollars to spare. Like rich rappers like Kanye West and celebs like Kim Kardashian who will absolutely get the Gold Edition of the Apple Watch. They don't care that it costs over $1200. It's a status symbol for them, and they can afford it easily, that's all that matters to them.