(PS: looks like I got on a roll…
To be fair - during the height of the iPod's popularity there was annual updates, and in many instances bi-annual updates. The iPod's family is on the decline, the Watch is meant to be growing.
I suppose, but the iPod also had different form factors emerge, and the physical interfaces changed as technologies evolved. Pocket-sized was supplemented by stick-sized and lapel clip-sized; spinning hardware wheels were replaced by touch-sensitive wheels; black-and-white LCDs were replaced by color touchscreens. And this was all without the iPhone taking over as many users' main playback device.
The size of the AW can't change much. 42mm is big enough, really, and going smaller than 38mm would be comically illegible.
Interface-wise, we already have a retina-density display which renders great color and differentiates between hard and soft presses. We also have voice control, which (mostly) obviates the need for an onscreen keyboard. There are only two hardware buttons, sure, but an app can magically create
four buttons of its own via Force Press.
(besides, keeping the hardware buttons only on one side of the case gives a clean "base" to push against with your other finger; see the iPhone 6/6+ as an annoying example of opposing buttons creating accidental button presses)
I'm still of the opinion that there isn't a lot to add to the AW as improvements unless they make a big advancement in battery technology -- and even if they can, there are some inherent limits to what such a small device
should be allowed to do.
The technical ability to have a QWERTY keyboard on the AW's screen is there, right? Neolithic-era smartwatches from HP (or whoever) had them in hardware, so why not do QWERTY in software? Because it's a pain in the ass, that's why. Remember, those old smartwatches didn't have companion smartphones, so they had to try to stand alone. Today, if someone has their smartphone nearby, they have no reason to type on a smartwatch screen.
(an aside on button sizes -- calculator apps on the AW are already at my bottom limit for practical use. A slightly fumbled tip calculation for a restaurant bill is hardly consequential. If I had to correct typos in text via a keyboard, I'd probably throw the watch at the wall)