Daryl Deino reporting for the Examiner:
We have heard from an inside source who claims the camera version of the iPod Touch 3G will be released this Spring. The source confirms to us that the iPod Touch 3G with camera had actually been planned for release this past September, but had problems passing quality control. […] The iPod Touch 3G with camera will allegedly have the same camera as the updated iPod Nano, which shoots video, but not still pictures.
There was a lot of evidence that Apple had planned to release an iPod touch with a camera when they refreshed their iPod lineup in September. This latest rumor claims that the iPod touch will get a camera, but only a video camera. I can understand why they put a non-still camera in the iPod nano, but why the iPod touch? The only answer I can come up with is: differentiation.