I think the two most likely upgrades for the iPod Touch are GPS and a 3G data chipset, in that order. Let me stick my neck out and say why. The Touch has always been like an iPhone 2G without the calling features. No more and no less. But now that the iPhone 3G is out and offering GPS, and the app store is offering many apps that demand location services, the Touch is suddenly locked out of almost all the newest, coolest software functionality that the app store brings. Without GPS the Touch will get left further and further behind the iPhone until no-one wants to buy it because it can't run 80% of the new (location-specific) apps that they want. Why would you fork out $500 for a Touch when you can't use all the cool apps? GPS is the first thing required to let the Touch keep up. Second, a 3G data chipset. Again, this is driven by the new app store. A lot of those apps take their data on the go. They are written to take advantage of the 3G data availability of the iPhone. Without that always-on access, they again become useless. Even if I have GPS in the Touch, I'm not always near a free wi-fi point when I need a map. If I want to use LocalPicks, without 3G I'm looking for a wi-fi network again. It's crippling. With 3G data the Touch is, once more, everything the iPhone is except for having the calling features. Once more it becomes a viable purchase for those of use who want an ultra-mobile computing platform but for whatever reason don't want a phone built into it. So who would buy a GPS/3G Touch instead of an iPhone I hear you ask? Perhaps someone whose company already issues mobile phones and won't spring for an iPhone. That person could buy a Touch and get all the new sweetness anyway while still making calls on the company phone. Also someone like me who wants their phone and mobile computing device separate. I desperately want the mobile data features of the iPhone but I like my actual handset separate because when I go surfing I can leave my valuable Touch at home and safely put my cheapo LG phone handset on the beach in my towel when I hit the water. I'd never, ever leave an iPhone on the beach unattended but I'll live if someone takes my $40 LG handset. There have been whispers that the new Touch is going to look more like the iPone 3G. Maybe that's because inside it is more like it as well. And one more thing makes sense too - the App Store prohibits apps that allow VOIP calls. Most comment on this has been that Apple doesn't want to upset the carriers who rely on voice calls for their revenue. That may be true, but what if the real reason is to stop the new 3G iPod Touch becoming a defacto iPhone? If they do add 3G to the Touch, prohibiting VOIP would be the one essential thing required to preserve the iPhone's differentiation from the Touch. An iPod Touch with GPS and 3G data would become a worthy partner to the iPhone 3G, allowing Apple to dominate almost every corner of the mobile computing market. The carriers would offer post-paid AND pre-paid stand-alone data packs and suddenly people who don't want to get into a long phone contract can get onto the iPhone/iPod bandwagon. Teenagers, older people, people who just don't want a contract. One brand to rule them all.