I don't think iPods are going to be obsolete. I think they just keep coming out with better iPods, just like everything else, technology advances and something better is put on the market.
I don't have an iPad and I don't plan on buying into it either. It's too big for me.
I know IPad's do other things than let you read books, but the whole Kindle, nook thing is not my cup of tea. I like to hold an old fashioned print typed paper book when I read. Just the tactile sensation of it, turning the pages, is it for me.