The case for a $99 2.8-inch iPod touch

iLounge speculates that a 2.8-inch iPod touch with the same resolution as current iPod touch devices would be a smart play for Apple at this week’s event.  They mention that the current Nano’s screen is only marginally smaller (2.4 vs. 2.8 inches) and it uses the same class of Processor (albeit with less RAM).

I like the idea for a few reasons:

• It would bridge the gap left between the Shuffle-sized Nano (which gets smaller) and regular iPod touch Retina Display with cameras (and lasers?)
• It would add a very inexpensive way to get onto the App Store and other media stores, which helps Apple in the numbers game vs. Android.  Apple starts to make more after purchase which warrants subsidizing the initial price.
• At lower storage points (4GB/8GB?) and no camera, It wouldn’t compete with the higher price point iPod touch with cameras, faster processors and Retina
• You can already find the current iPod touch 8Gb for $149 on Apple’s refurb store.

The major downsides which could be deal-breakers:

• Typing on a 2.8-inch screen would be difficult
• At $99, Apple would risk being considered cheap.  Maybe $129 or $149 are more realistic, but less awesome.
• The speed of the older/cheaper chip architecture has taken a significant hit with iOS 4 (see iPhone 3G).  It would be unfortunate for Apple to release a slow device out of the gate.  Maybe Apple has a speedy/efficient A2 processor waiting in the wings.

Still though, it is an interesting concept.  Imagine a Wifi, full web browser, email client, 250,000 app App Store, Maps, videos, photos etc on a sub-$100 device for the masses.  If you consider the implications, would this be a better OLPC device for kids with small fingers?