I definitely don't see this a a bust move. I think it's great that Apple is releasing different iPods for different target audiences.
Every time Apple releases something different, there's always something different to bitch about....
When Apple released the first generation iPod, people called it an overpriced toy. But it jumpstarted the portable media player and is a milestone in the technology industry.
When Apple released the 4 GB iPod mini, people asked WTF? For an extra $50-$100, you can get bigger bang-for-the-buck by purchasing the 20 GB iPod. Despite that, the iPod mini sold extremely well.
When Apple discontinued the 6 GB iPod Mini in favor of the 4 GB iPod nano, there was a flame war going on about how Apple screwed up. But it was still a hot seller.
When Apple declined to put a built-in radio, people were in an uproar. I personally don't miss the FM Radio feature.
When the iPhone came out, another Apple sucks campaign started up with the missing features and its limitations. But the iPhone is still on the best seller charts in the cell phone industry.
The new iPod nano is getting heat for being "ugly". The iPod touch is getting torched for not having enough capacity. Yet the beat goes on...
But methinks time will tell a different story.... I think the nano and the touch will sell like hotcakes and make the other competitors like the Zune and Creative Zen try to play catch up.
I'm quite happy with my 60 GB iPod video and my 8 GB iPod nano. But I might be tempted to get the iPod touch.....
At least, Apple has made a wide variety of iPods with different audiences in mind. Pick the one that best suits your lifestyle and be done with it. I have a V6 truck to haul cargo around the city. Yeah, I know it sucks up gas and wished it would have the MPG like a small hybrid car but I accept my truck's limitations and enjoy it for what it's worth.