There's a lot of speculation about future iPods, and if they'll play video - but you don't need to wait, the latest version of podzilla (Linux for the iPod) plays video, and now video with sound. Check out the site below for a quick how-to on installing Podzilla. Also here is a brief video showing many of the other features podzilla offers.
Check out Podzilla install on a Mac here.
Check out how to convert your own Videos, and Install off of a Windows Machine here.
Check out video with sound, playing on an iPod photo.