Apple should be careful about what it does...if they release anything that seems just a tad superfluous to the average consumer, it won't be big like the iPod. It should be classy, but it should be classy appropriate to the function.
Whatever it is, it will be cool. There will probably be tough fingerprint resistance, and probably something interesting we haven't yet heard of (maybe visualizations or something?).
IF it does play music, there seem to be many problems. For people most interested in music playback, with some interest for video on the side, the 5G iPod is great. People that want the reverse, in a possibly pricier portable device, are not as many. People may want it if it beats the 5G iPod in both categories, but if it does that it would likely replace the 5G as the 6G iPod (music-centered, well, sorta). And if it is truly a video device, new, exclusive content would be necessary to separate it from the 5G iPod (just screen size doesn't cut it).
I don't understand portable video beyond the current iPod. Music is something everyone can appreciate even while they walk and do other things, hands and eyes free. Video playback is best in a stable position, like sitting, without having to hold your arms up to watch a half-hour show on a relatively small, though perhaps comfortable, screen. Portable music = welcome entertainment; portable video = just a tad more gadget/geek and a bit less practical.
That said, if it does beat the 5G hands down in every spec, I'll buy one, but mine won't have video as its mission in life - it'll be for music.