Its not such a bad idea, considering the technology is becoming so compact the user interface like the buttons and the scroll wheel are becoming hard to be incorporated in the products, and with the touch screen we could see many interesting features that can be had with that interface. Plus it will allow for a much bigger screen to be had in a current or even smaller size package.
And apple would probably think about solving the issue of finger-smudge before they build it, or at least i hope so.