After watching, or reading, about Apple's Rock and Roll event, you may have been disappointed to hear that the iPod touch 3rd Generation did not get a camera camera that was very anticipated. Even after some fairly-reliable case pictures from Hama and a video, it all turned out to be pure rumors.
After the event, David Pogue, had a special interview with Steve Jobs. When Steve was asked why a camera was not added to the new iPod touch. Steve replied by saying
Originally, we weren’t exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine,” he said. “We started to market it that way, and it just took off. And now what we really see is it’s the lowest-cost way to the App Store, and that’s the big draw. So what we were focused on is just reducing the price to $199. We don’t need to add new stuff. We need to get the price down where everyone can afford it.It seems like Steve is missing the point, a camera would add more gaming functionality. Take a look at the DSi for example. It is a major portable gaming device and it's latest improvement added a camera to it.