Read about it here. I've heard the rumor about the iPod Classic elsewhere. If Apple comes out with a 128 GB iPod Touch (the current high end one is 64 GB with an MSRP of $399). That way they'll only be sortof screwing the people that want to take their whole music library with them wherever they go (i.e., by making them pay $399 instead of $249).
Whether that will happen is another matter entirely. My gut tells me it won't, based on flash prices and the amount of flash in all their other products (you still can't get 128 GB in an iPad, and the iPhone 4 tops out at 32 GB). Going to $499 would also be a real stretch. So my guess is that the iPod Classic will hold on for another cycle until a flash player gets close to the 160 GB threshold. I just don't expect it to get revved again.
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