In a surprise announcement, Apple launched a seventh-generation iPod Touch with an A10 processor and storage options going up to 256GB. The previous model used an A8 and maxed out at 128GB.
The new model retains the 4-inch screen, probably keeping that iOS screen size alive for the foreseeable future. The device also uses a non-Touch ID Home button, headphone jack and single speaker. It also keeps the low-end 32GB model at the same price ($199) as the previous generation.
While the update looks modest, especially after almost 4 years since the sixth generation, it is possible that the reason for the update is that the next version of iOS will not support the old iPod Touch. The A10 processor is also used in the iPhone 7.