There is growing speculation about a new IPod Video coming out with a 3.5 inch screen. Basically imagine an IPod with a screen the size of the IPod and the buttons and scroll wheel are virtual.
Gizmodo have posted pictures of the what is supposed to be a patent application for the new interface, but there is a certain amount of doubt on it. Still if it is real and they can work around the scratches on the screen that people are complaining about today then this could be the way of things for MP3 Players in the future. IRiver have already done something similar with their U10. No more buttons, everything is a touch screen and the controls are all virtual. Better start washing the oil off your fingers now if your going to avoid smudging these things.