It appears a new incarnation of the iPod touch is on the way with both the hardware and software capabilities to take advantage of the new iOS4 system.

Most current iPod touches can, of course, be updated to run the system, but features such as FaceTime video calling are a no-go without a camera.

PocketLint has a report of a presentation by Rob Hennessy, the audio and telecoms buyer for John Lewis, a leading UK department store chain, discussing the new model. Unless he’s a rambling lunatic (which seems unlikely given the chain’s hiring policy) it appears that the details are legitimate and he’s talked about the new iPod touch earlier than Apple would have liked.

According to Hennessy, the new model will include a 5-megapixel HD camera with flash, an accelerometer, and a gyroscope. He also mentioned FaceTime calling (through WiFi only naturally), which suggests a front-facing camera.

To all intents, it seems to be an updating of the idea that the Touch is simply an iPhone without the phone facilities.

Hennessy also suggested the model will mainly be aimed at younger users, which makes sense as they are less likely to be able to afford (or even get credit for) the monthly service fees of the iPhone.

Meanwhile a Taiwanese blog, spotted by AppleInsider, has reported Apple suppliers have produced a 3cm square touchscreen for a future product. The accompanying photos don’t actually offer any evidence there are input facilities rather than it simply being a display.

The blog speculates that the screen may be designed for revamped nano or shuffle models, but more intriguingly has the idea it could be for a wristwatch-style product. It is hard to imagine such a tiny touchscreen being able to offer more than one “button”, but a wrist-based iPod which lets the user control music without needing to press physical buttons might appeal to the sports market.