If they were to introduce video, the entire unit would have to be redesigned... a bigger screen, different controls, etc. I'm not so sure they could keep the unit that small with a large color screen... and the battery life would be terrible (I would think, even with lithium ion batts.)
The technology is there... units like the iRiver, etc. have proven it... but they are still pretty bulky in size, whereas the iPod probably wouldn't be accepted by the masses if it got much larger... iPod fans have gotten so used to the compact design.. I know I have, and I'd be apprehensive about buying anything much larger just to listen to music, etc. even if it did play video, I'm not sure I'd need it.
Besides, iPod is for music... my iBook plays the videos...
