Well, Apple really wants to sell you the Touch; the Classic is only around for a specific (loyal) iPod niche, and the Touch is the future. This was even mentioned in one of the Mac-centric podcasts I listen too; Jobs sort of brushed off the Classic intro compared to the Nano and Touch intros. Of course, there weren't that many changes, compared to 2 basically completely new products. There's a certain niche of MP3 player user that wants to carry their entire music library with them all the time, and flash memory still hasn't advanced to the point it can offer sufficient capacity to service these hardcore users. These people have been consistent buyers of the hard drive-based iPod over the Nano, and Apple thinks there's enough of a market there to keep an iPod around for them, even though their future drive is toward more iPhone/Touch-like devices running OS X. That's why there's a price overlap between the Classic and Touch. Remove the Classic, and their price structure is pretty logical: $50 between the 2 Nanos, $100 between the Touches and the iPhone.