At its It's Only Rock and Roll press conference in San Francisco, Apple revealed a new generation of iPod nano handsets with a built-in video camera.

New 8GB and 16GB versions of the tiny media device come with a camera capable of recording video and taking still photos at a resolution of 640 by 480.

Also added is a microphone for recording audio.

The inclusion of a camera in iPod nano handsets comes as a surprise considering Apple was widely rumoured to be working on a third generation iPod Touch that included a camera.

Sadly however, the camera won't handle still photos. Apparently the electronics needed for that are too thick to fit within a nano.

iPod nano is available now at $149 for the 8GB model, $179 for a 16GB handset.