The latest rumor suggests that a new iPod touch with a video camera will arrive with an upgrade next spring. According to an "inside source" who spoke with The Examiner, the new iPod touch will have the same video-only camera that is in the new fifth-generation iPod nano, which was released in September.
The report corroborates what AppleInsider learned in September -- that the latest iPod touch upgrade was originally intended to include a camera, but the feature was scrapped just before release due to a batch of bad parts. But sources have said that Apple still intends to eventually release an iPod touch with a camera.
That Apple intends to release a new iPod touch with camera is not new, but the alleged timing is. In 2008, Apple did a mid-cycle upgrade of the device, offering double the memory in a February debut.
A teardown of the late 2009 iPod touch revealed that it includes space for a video camera like in the iPod nano. The camera space supported previous photos of a purported prototype of the hardware, complete with a centered camera on its back. In addition, numerous third-party cases included space for a camera on the iPod touch.