As to the rumors:
iPod AV will be available in 60/80GB models, in black and white. It will be able to stream music to any Apple-compatible video or music player in your house over Bluetooth or WiFi. It will have a large, ultra-high-res 720x480 pixel OLED display, slightly smaller than the screens on current Pocket PCs, on which you can watch videos (converted to H.264 from DivX or MPEG by iTunes upon import, similar to the protocol used with WMA audio). The controls will be on the sides of the device to maximize the size of the screen.
In conjunction with the introduction of iPod AV, Jobs will also introduce the iTunes Media Store, included with iTunes 5.1. The new iTMS will utilize a BitTorrent-type peer-to-peer protocol for faster downloading. Initially, it will mostly be music videos available (and a few independent films), but movie studios will catch on, just like record labels caught on to iTMS a couple years ago.