Rumors started to emerge over the weekend after a listing for an "iPod touch 3G" (as in third-generation, not 3G wireless) silicone skin case appeared online with two holes cut-out on a corner, supposedly to accommodate an integrated camera. Although the 'leak' was likely designed to drum up traffic to the site, the feature actually makes sense and has been rumored for months.
Adding fuel to the fire, Techcrunch is reporting via "sources in Asia" that Apple has ordered a massive number of camera modules (the same ones used in the iPhone 3GS) for use in future iPods. The touch has always had near-parity with the iPhone in terms of features, barring the obvious cell phone functionality and a few other things, so it would be no real surprise for a new model to feature video recording later in 2009.
Interestingly enough, the report indicates we might see these inexpensive (~$10) camera modules in all iPods except the shuffle. Without the iPod touch's interface and processor power, however, it's hard to see that being functional for anything but still photography. In any case, the move has the potential to disrupt the low end digital video camera market and, if true, could be announced sometime around September - when Apple usually intros new iPod hardware.