Is a camera really that important?
It's cool, it's geeky-heaven, but in the end, it's not something I'd focus on. An iPod touch gives you the App Store. 75,000+ functions vs camera. I think the apps win.
The new iPod touch 3Gs are NOT 2.5G. At least, the 32/64Gb models aren't. They feature a new ARM Cortex processor that rivals the iPhone 3GS. And a new graphics chip that also rivals the iPhone 3GS. Performance should be on par with the iPhone 3GS or slightly better.
If that's what you call 2.5G, then go ahead. But if you knew what you were talking, which apparently you didn't, then call the 3G - Camera.
Calm down... I have very little interest in a nano style camera that can't do stills. I'm just passing the information along.