Following with the reports that Apple will be updating the iPod touch this year with an “all-new” design, Japanese site Macotakara is reporting that Apple is moving the iPod touch to a 4-inch screen, like it is rumored to be doing with the 4″ iPhone.
The internals would also be bumped up, basing it on the iPhone 4S, and the case would be a “buffed aluminum” rear shell instead of glass as on the iPhone, or the current mirrored stainless steel on the 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.
Lastly, the report claims there will be an additional hole in the lower half of the rear shell, separate from the camera. However, it is currently unknown what that hole would be used for.