A color screen is a bad feature for the iPod, unless of course Apple is planning on adding some other functionality. Still, I hope Apple is smart enough to realize that the iPod is a success because it does one thing - play music - really well. The best way to keep the iPod successful is to improve upon it in 4 areas - 1) battery life, 2) storage capacity, 3) overall size of the unit, and most importantly, 4) reduce the overall price of the iPod.
I'm not saying that Apple shouldn't continue to innnovate on the product, but any addition of a color screen or video playing capabilities will fundamentally change what the iPod is supposed to do - play music, and go against what Apple should be striving for - reducing the price so they can sell more.