I had already talked about it; Apple wanted to introduce a camera on the iPod touch as early as the third generation, although it ultimately took until the fourth generation for it to happen.
What’s uncommon is that many prototypes of this model are circulating, and photos and videos are quite easy to find. Apparently, the sensor is an Omnivision 2-megapixel one (OV2265), and it is centered, which is quite unusual for Apple devices. Plenty of photos in the continuation.
For your information, these are ‘DVT’ units, meaning beta devices: development is complete, and the differences with the final model are minimal when there are any.