Apple can't afford to ride the iPhone gravy train and stop innovating the iPod. Being locked to a carrier for as long as Apple is to AT&T hinders the iPhone's growth quite a bit when you think about how many phones they could sell if they had no carrier exclusive agreement.
I bet we'll see a widescreen iPod by Christmas that is iPhone like without the phone. I just hope it has wifi and the browser. I think Jobs gave us a hint when he said the following in his Town Hall meeting to Apple:
Regarding OS X:
"There is one OS group that does Mac OS X for the Mac and the iPhone, as well as "some iPods we're working on."
If nothing else, I expect the higher capacity iPods to be widescreen, else why take the effort to port OS X to it?