i don't think this is the case.. remember that apple made a name in music because of ipod even beating walkman of sony. also, out of all the ipod models that came out, ipod touch is their most successful model.
i remember reading an article that the CEO mentioned that they will not abandon ipod since it's their bread and butter from the start. well, its been 2yrs, where is it?
also, this model is for those who cant afford iphone but want a taste of its iOS features.. of course without the phone function.
well, they're not gonna abandon it for the meantime, but surely it's the least of their priorities. two years and not a single upgrade for any iPod product, and they also killed off the Classic.
also, since there is a shift to streaming, and unlike Spotify, where iTunes both have streaming and download capabilities, there is a seamless almost Spotify-like transition available to iTunes users. This creates a lesser dependence on flash storage and more dependence on data connections, which only the iPod Touch has. I am pretty sure the iPod Shuffle is the next to die, and the Nano with Bluetooth connectivity may still be alive, but only as a niche product, where it is the budget version of an Apple Watch (which can do what the Nano does, as to how the iPod Touch is the budget version of the iPhone.