I think that besides improving the iPod Apple should at least consider making a PDA for the same reason they made the iPod
Look at the PDA market before the iPod, everything had tiny storage (Some exceptions), old technology (USB), and was complicated and hard to use. The market needed an Apple product and the iPod solved all of those problems, for a price.
The PDA market is similar especially with Palms. Little memory, slow processors, hard to use (Graffiti). The newton is 4-5 years old and is still about equal with the Pocket PCs and lightyears ahead of even the most expensive Palms.
Seeing as the Newton was 133 they should be able to make a PDA about the same size with a 233+ G3 or Powermac chip in it. If they had that it could run OS 8 or 9 (possibly Aqified). That would mean that there would be a huge amount of software which would run on it right away and it would make it very easy to transfer files from it to a Mac or PC.
What do you think?