It might be a fake video but I know in an interview, Steven Jobs says that hes working on improving the iPod for the use of video and music, more focused on video to shake the industry.
This might be that idea coming to work.. looks a bit like a PSP with the wide screen though.
i belive it, touch screen? totally. it is something with a like 100000 gig hdd that you wont use. a horrible screen quality and a horrible touchscreen. full of bugs. ya i belive it. apple will put a apple comp in a ipod one day. while i am stuck with my not color lcd screen dell pcoket dj not supported by dell anymore. but i love it.