There have been many rumors circulating around the web about what Apple’s new iPod product line will be like. One rumor suggested a “Zune Like” iPod Nano sporting a larger wide screen that was set into the iPod vertical instead of horizontal. Now a blog on BusinessWeek is claiming that a larger iPod Nano with a fully touch operated UI could be on the way.

He claims to have seen a person with what looked like an iPhone but smaller in the wild which looks extremely familiar to Apple’s iPod lineup. This is probable because Apple usually gives a select few the chance to field test their devices to check for bugs and design flaws out in the field.

“But I would not be surprised to see a new touch-screen iPod nano hitting store shelves in time for the holidays. There’s been a lot of criticism of the “little fatty” form factor of the current generation, but what if that same shape was made a little larger, with a full touch interface?

Out in the wild the other day in San Francisco, I saw a guy whip out and change his music on a black touch-screen device that looked suspiciously like an iPhone, only smaller. Apple often has key employees test new devices for bugs before rolling them out, so it’s not out of the question.

Of course, one glimpse does not a product make. But others are suggesting it’s not just my imagination working overtime. Analyst Charles Wolf at Needham says this: “The fall line-up of iPods should change in a dramatic fashion” to reflect design changes that came with the iPhone. And one of Apple’s business partners tells colleague Peter Burrows that an iPhone-shaped iPod nano is on its way.”

What do you think of a touch based Nano? If Apple released such a device it would greatly improve the market for the App Store which would benefit a lot of people. If they do release a Nano would you buy it? What you you like to see it one? Let us know in the comments!

[Via BuisnessWeek]