In line with a fresh report from KGI Securities analyst Ming-Chi Kuo claiming that Apple will be updating the iPod touch later this year with an "all-new" design using the same in-cell touch display technology rumored to be used in the next iPhone, Japanese blog Mac Otakara reports that Apple will also be moving the iPod touch to a 4-inch display from the current 3.5-inch display. Apple is otherwise said to be basing the iPod touch's internals on the iPhone 4S, although the case will include a "buffed aluminum" rear shell rather than the glass back of the iPhone 4S or the mirrored stainless steel of the current iPod touch.
According to asian source, new iPod touch (5th generation) will have 4 inch LCD which is the same size with coming iPhone 5.
CPU or other spec is considered to be same with iPhone 4S, and has different back-case design, which will be not mirror polished but buffed alminum one. And it seems to be prepared black and white color model.
Rough mockup of fifth-generation iPod touch with buffed aluminum rear shell and larger display
The report's source also indicates that there is an additional hole in the lower portion of the rear shell, separate from the camera found on the current model. It is, however, currently unknown what the function of the hole will be.
