C'mon guys, we gotta think outside the box. I can think of some very good reasons to have a color screen on an iPod:
1. Quick review of photos (note that many photographers now use the iPod as a repository for captured images on shoots). Additionally, an iPhoto integration would make this worthwhile. Pretend you're a realtor and you're showing a client some houses. You've got twenty possible options to show, but the client only has time to see five. Pop out your freshly-sync'd iPod and show them the house photos. Sure, this can be done in the office or with paper prints, but the point is that this TYPE of thing can be done and be very useful.
2. Review of video content. An iPod with a video output option and a color screen for reviewing my DV files would be great for client presentations. Imagine being able to go into a client meeting with just an iPod, hook it up to a TV or projector, navigate to a series of TV commercial edits and display them. No muss, no fuss. Way cool and way useful (for me anyway). Yes, technically you wouldn't need a color screen to do that, but it would be helpful for previewing.
3. iTunes-type visuals. Yeah, it's stupid and pointless, but still fun. I admit, I'm not big on gadgetry (I never play the iPod games), but if it's value-added and doesn't cost me anything in performance, money or interface, why not?
4. Color can help with organizational properties of data content. For example, if Address Book would ever add the color labels feature, that would work well on a color iPod.
Others have mentioned similar "useful" features. At some point, Apple almost HAS to go color, just to stay perceptively competitive. One day we will all look back and laugh at these silly old outdated monochrome iPods. Maybe I'll put mine in a place of honor like my old SE.