I don't think we'll ever see a HDD touch. Too many complications with access speed, battery life, etc.
I really don't know. They've worked just fine in the iPod "Classic" for the past 10 years or however long they've been out? Would the touch screen *really* make that much of a difference?
I've always believed that they haven't done a HDD version yet because it was a last minute product downgraded very quicky from an iPhone to meet popular demand. I.e. they haven't had time to do a HDD version of the hardware. Personally I prefer flash, but I do believe that we'll see HDD eventually to satisfy the massive crowd who really want the Touch but can't live with the small capacity.
Either way, 6-12 months I'd say for an increase. I'd probably bet on 9.