Would an iPod AV make sense?
Without much thought most of us could make a decent case that the video iPod is going to come out sooner or later. Video playback is already built into iTunes, Linux hacks on the current iPod show it too is capable of video playback. The iPod photo showed that TV output was a viable option.
With the introduction of the PSP, handheld video playback became a real market, and the sheer number of UMDs coming out suggest that the PSP will be sticking around for a while (I'm ignoring the fact that it plays games too). If the iPod is ever going to make the leap to video, it had better do it before the PSP starts to make inroads into the music arena (if the PSP came with a hard drive, this would already be happening, consequently, with the limited capacities of the MS DUO format this won't be happening for a while).
Getting the iPod to play videos, any videos, would be a big step in the right direction. Of course, the PSP's success in the movie business was due in large part to its screen. The new iPod needs a similarly great LCD panel in order to make the move legitimate. This means rotating the iPod by 90 deg and increasing the screen area. To accomodate a widescreen aspect ratio, the proportions of the iPod might also be altered (the nano got away with it so why not the regular iPod). The controls wouldn't need to be changed at all.
The final piece of the puzzle would be to make it as easy to get movies onto the iPod as it is to rip audio off a CD and into iTunes. The new iTunes
will most likely allow you to move music videos (like the ones already given away with some albums) and movie trailers to your iPod. iMovie might get redesigned to handle iPod video, with direct control remaining within iTunes (sort of like how iTunes can grad iPhoto albums and sync them with your iPod). If QuickTime keeps going the way its going, it might merge with iTunes completely, eliminating the need for iMovie integration altogether.
We'll see soon enough.