Jesse Tortora says Apple hired several game developers. The iPod would be an excellent platform to get into the console market, he says. The console could become a combination between the Mac mini and iTV, while a mobile handheld console could be based on the upcoming widescreen iPod video.
I'm a bit sceptical that Apple is planning to get into the console market, I think it's more likely that upcoming iPods will get a bit more gaming functionality rather than that they'll launch a 'gaming iPod'.