As we announced a month ago, the new iPod Touch will feature the Retina Display, and a front facing camera for FaceTime.

Front-facing camera in the new iPod Touch, image from MacRumors.com

MacRumors received pictures of the face of the new iPod Touch. We can’t think of anything that Apple could use that camera for except FaceTime (maybe PhotoBooth, if they bring that to iOS), so there’s a good chance that the iPod Touch will have FaceTime. While FaceTime should work, it is still unknown how the calls will be initiated. It is thought that they will start over email. MacRumors recently unearthed screenshots of how this will work:

Screenshot of initiating a FaceTime call to an iPod Touch, image from MacRumors

Slovak site, MôjiPod.sk [in Slovak, link is to a translation of the site], confirmed the presence of a Retina Display on the new iPod Touch. Following in the footsteps of its big brother, the iPhone 4, the iPod Touch will make converting graphics to a higher resolution more attractive for some developers. This means that more of your apps will look fantastic on the iPhone 4 and the new iPod Touch.

MôjiPod also says that a Chinese vendor that they talked with had seen a prototype of the new iPod. They claim that it will have a second camera, like the iPhone 4, except it will only be 3.2 megapixels due to space constraints. This would likely be the same camera as the one that is in the iPhone 3GS right now.

Retina Display in new iPod Touch, Image from MôjiPod.sk

With all these changes that we’ve heard of, we started to wonder what else from the iPhone 4 will be in the new iPod Touch. Since Apple added a gyroscope to the iPhone, its likely that one will be present in the iPod too. When combined with an accelerometer, this allows games and utilities to get a much clearer idea of where the phone is in space. With a better understanding of its location, games that depend on motion will be smoother and more fun to play.

UPDATE: 9 to 5 Mac found an eBay auction for a prototype of an iPod Touch with a back side camera. The pictures are small, but they seem to be the same as the ones that were floating around earlier this year. It’s amazing what people will pay for unreleased Apple products—this auction is going for over $1320!

We’ll tell you more about the iPod Touch here and on Twitter as we find out. To keep up to date with our news, rumors and reviews, follow @FreeiPhoneApps on Twitter.