I’m not sure I really get the iPod Photo. I have to assume it’s an evolutionary product on the way to somewhere (e.g. playing video).
To me, the iPod is about personal consumption of content. People close themselves into their world of music. The implication of this new product is that people will want to carry all their photos with them at all times in order to share them with other people. I’m not sure I buy that. I’m not sure that other people have the patience to go through more then a few dozen of someone elses photos. And photos have a half-life. I carry a few photos with me on my phone, but it’s been a while since I’ve shown them to anybody. I rarely meet people now who haven’t already seen photos of my wedding 🙂
Video, though, IS about personal consumption (catching up on your TV shows and movies). The form-factor and storage of this device are right, the lack of video support is a problem.