There are quite a few reasons for the lack of camera in the iPod touch. Speaking to David Pogue, the Steverino himself picks a couple of them:

Q. You put a camcorder on the iPod Nano. Why not on the iPod Touch? A. Originally, we weren't exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine. Because a lot of the games were free on the store. Customers started to tell us, "You don't know what you've got here - it's a great game machine, with the multitouch screen, the accelerometer, and so on." We started to market it that way, and it just took off. And now what we really see is it's the lowest-cost way to the App Store, and that's the big draw. So what we were focused on is just reducing the price to $199. We don't need to add new stuff - we need to get the price down where everyone can afford it.


So there you have it. Steve says that the reason for the iPod touch not having a camera is simple: People don't want a camera on their iPod touch. They just want a cheaper iPod touch, as a game machine, no cameras involved. There, done.

You know, like the Nintendo DSi.

But he may be right about what people don't want. Like when he said that nobody wanted video on a tiny screen, and then Apple released the iPod video a year later. Or when he said that people didn't want flash-based music players—as they always ended up in a drawer—and then the insanely great iPod shuffle arrived. Or when he argued that most people didn't want FM radio in digital media players, and... ah well, nevermind. [NYT]