A Real Video iPod?

Interesting speculation out there about the next big thing from Apple (now that they've introduced an iPod boombox of sorts and a new Mac Mini): A larger screen, bigger capacity iPod with real video appeal.

Someone made a quick graphic, and it looks very nice. Avid iPod users may note that there is no mechanical click wheel - it is a software element, brought to the fore of a touch screen when pressure is applied in the right place on that screen. Several sites seem to indicate this is all going to be announced in the next month or so, with full length movies offered on iTunes.

In light of Microsoft's latest, an "ultraportable" PC (albeit with very short battery life, no input mechanism and a price tag of $700), this is a pretty interesting alternative.

Maybe this is what Apple has up its sleeve? If so, what does it mean for consumers? Will they pay for and watch video on a 4-inch screen? If I had an hour long daily commute, which many people in big cities face each way to and from work, I'd consider that a good way to spend some of that time. Would I use thisw device? Or the other guys' "ultra" thingee? Not much of a decision, really...