[Updated: September 9, 2009 @ 7:17 pm] Contrary to popular rumor, the new Apple iPod Touch announced today does not include a camera. But happily the newly revamped iPod Nano sports a camera that shoots not only still images, but also video (but not still images). In his first keynote appearance in a year, Steve Jobs compared the new Nano to the Flip camcorder saying it delivers 4GB of video storage for $149, while the new Nano provides 8GB for free. $149 for the 8GB Nano is not exactly free, but considering the new Nano includes a slew of other great upgraded features (like built-in radio), it's still a great deal.
Though I erroneously noted that the new Nano could shoot still images when I first published this post, in a post-announcement Q&A with the New York Times, Jobs answered the question of why the new Nano can't snap still images by saying "The sensors for doing video are fairly thin. The sensors for doing a still camera, at much higher pixel resolution — and we’d really like to have autofocus — they are just way too thick to ever fit inside the Nano."