Apple was a pioner in the digital camera but they went the way of the newton.
Couldn't Apple come on stage and release iPhoto and a digital camera (masive storgae and masive pixels).
Think of something between 2 and 3 megapixles and a 1 gig of storage (a flavor of the hard disk in the iPod) or perhaps a fire wire connection that allows you to download photos on to your iPod on the go. Then you would need as much storage on the actual camera. That would drive sales of both devises and turn the digital hub into a digital web.
My personal opion is that Apple would release a digital camera before it thought about the digital camcorder market.