iLounge has posted a photo of what is believed to be the next generation of iPod Nano. Not only does it have a slightly larger screen at 1:5:1 with a smaller click-wheel, but it includes a camera as well.
"Finally, theres a camera on the back in an unusual location, one which conceivably might be blocked by hands except when the iPod nano is corner-gripped for photography. It will debut at the same time as the new iPod touch, between July and September. Our gut feeling is September."
While this is still a rumor at this point, it would make sense to include a camera in the Nano as previously mentioned by Hardmac. Small cameras are so cheap at this point Apple could easily include the camera as the next value-add to the upcoming Nano.