the market has become staid, so has the ipod. a colour screen is not what people want to see, or at least not something people are gonna choke on their cornflakes on at the announcement of.
there is the portable media device, but these are all crap, and the PSP, which is something entirely different, but has the same appeal, and price tag, and the ipod.
the other mp3 players don't get much of a look in anymore, IMO, unless you're a complete PC fanboy and swear by your iRiver (i swapped my ipod for my friends iRiver for a week, with similar music. i couldn't wait to get my ipod back after about 3 days. needless to say, he now has an iPod)
it would be naiive to ignore the multimedia device market, as it's a logical progression, and the public will see it this way also. if the ipod doesn't go this route, the public will see it as falling behind the times, and therefore not the must-have-it gadget that it is (or was)
remember, 'iPod', purely as a name, doesn't denote any connection to music, or any media for that matter. as much as i'm against portable video (it sucks ATM), i think it is the way forward.
hence, R+D is needed, as are portable, scalable, powerful chips.
Macs will always be around. they now have the finances to do what they want with macs, so the focus has to stay on keeping the revenues coming in (ie selling ipods and songs on iTMS)
£0.02