I guess the thing is that once you get past the basic capabilities, then everyone has something that they personally want, but which is meaningless to the majority.
Everyone wants a good music player. Everyone wants to be able to throw some files on it from time to time. Beyond that... it's often diminishing returns in usefulness for most people, at the expense of cost and complexity.
Even the PDA functions are useless for me, for example. I have a PalmOS cellphone. Why would i want a contact list that i can't edit on the road? I guess adding that functionality was fairly easy, and helped hype iCal and iSync, so Apple did it, but consider the other functions that are being suggested:
-color screen: gee whiz cool for 5 minutes, then 5% of users actually use their iPods for video and photo viewing, and the other 95% suffer with increased cost and lower battery life.
-FM tuner: some people like to listen to FM radio. Many don't. If Apple adds this, everyone will have to deal with a bulkier and more expensive iPod.
-Recording (real recording, at 44.1/16): well, this one i have to support, because it's something that _i_ want
But also, it's something that should not require any additional hardware tradeoffs (unlike a color screen or FM tuner).
-Digital camera transfer (active USB host ability): this one is interesting. It's a neat idea, even though the increasing capacity of flash media is almost but not quite keeping up with people's needs. Indeed, iRiver's just announced iPod competitor has this capability. The only problem with this is that for the capability to be truly useful, it needs to be paired with a color screen for the ability to view photos. The ability to crop and do basic edits would be gravy, but not really practical with the current interface. Direct printing would not work - printer companies would have to write iPod drivers for their printers, an unlikely thing in the near future (though the HP deal makes this a faint possibility).
So basically.. unless Apple wants to make a special 'gee-whiz' iPod line, separate from the regular iPods, it won't go for a color screen or FM tuner. Recording capability and built in USB host capability are possibilities, however.
Just my thoughts
-robo