The new second generation iPod touch is not only thinner itself, with a rounded, polished aluminum back, but it also ships in a simpler, smaller case as well, just like the Nano. It also introduces Genius playlist creation, audio recording features when used with a mic, and a built in Nike+ iPod receiver.
The new iPod touch ships with standard headphones; Apple will release two headphone options next month that include a mic and playback/volume controls: a standard earbud pair for $29 and a premium dual driver, in ear set for $79.