The newest iPod Touch builds on the great tradition of the previous models. It's a great MP3 player, but also so much more. It plays music, sure, but also displays photos, plays movies, browses the web, plays all the iPhone apps and games, and now even shoots movies and has Apple's "Facetime" app, to video chat with other iPhone, iPod Touch, and now Mac users (the Mac software is currently in beta) over WiFi.
The actual iPod Touch case has changed a little. It's a little thinner and flatter than the previous model. The volume controls are on the side, and they're quite small.