The iPod Touch was an industry landmark product, announced Sept 5th, 2007.
Apple added a phone app, and came out with a new brand (iPhone), releasing it before the arrival of the "iPod without the phone app", in January of the same year.
The screensize was made bigger, with a new brand (iPad), announced January 2010.
While Apple's marketing department is keen on the word "different" and slogans such as "This changes everything", adding a phone app and changing the size of the screen cannot really be described as completely new products, let alone keeping the product almost identical and changing the screen resolution.
There has been a dearth of innovation, and imagination, since the original iPod Touch. Even end-users, asked "what do they want in the next iPad", hold out for not-very-revolutionary features such as a still higher resolution screen, higher resolution camera, maybe a connector or two. Apple are one of the few companies that will be able to announce with a straight face a new iPad with a higher-speed USB connection and say "This changes everything".
Apple did an incredible job designing the iPod Touch in the first place, and an even more remarkable job in marketing it as if it were so many different products. Ultimately, a product that is clearly derivative from a 2007 design will be beaten by a new product, the question is whether the new product is from Apple or somebody else.