I think it is video, but not just movies but also a means to download TV for 'watch when you want' is my guess. Who says this HAS to be via the tiny screen? iPod Photo already has video out, so why not sync at your PC and then plug it into your TV, or better still, stream it over Airport to your TV... :-).
Removable media, like PSP?
I also suspect it may be a phone. A phone might be better announced in Paris.
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