Apple quietly pushed out a new iPod Shuffle onto the world this morning. This marks the third design change for their smallest and cheapest model in the iPod line. It's roughly the same size and shape as a disposable cigarette lighter. Apple claims it's smaller than a AA battery, measuring in at 1.8" tall x 0.7" wide x 0.3" thin. It weighs just over 10 grams. The case is made form anodized aluminum just like the new Mac models. It comes in either grey or black. Furthermore, the storage space has been beefed up to 4gb; double what the second generation model had. The player supports AAC (16 to 320 Kbps), Protected AAC (from the iTunes Store), MP3 (16 to 320 Kbps), MP3 VBR, Audible (formats 2, 3, and 4), Apple Lossless, WAV, and AIFF audio formats. Apple Losseless was not a supported codec in the previous Shuffle models. Conspicuously missing are the controls for the player. It now has a simple tri-switch on top which switches playback from shuffle, loop, and stop/power off. The rest of the controls are still there but have been moved to the earbud wire. The most important addition is the new Voice Over feature, which tells you the name of the song or playlist currently being played. For battery life, Apple claims 12 hours, which is usually pretty accurate. The G3 Suffle costs $79 USD.

Already, pundits are divided over this new model. The Shuffle has always been one of Apple's best sounding MP3 players, and is certainly one of the smallest available. However, it does suffer from numerous drawbacks. It still lacks a display but the biggest problem with this one is where the controls are located. Since they're on Apple's earbuds, you're forced to use them. Many complain about the low audio quality of Apple's buds. I know I still haven't taken mine out of the box yet. Adding the controls on the buds means you can't swap them for better headphones, at least not until third-party manufacturers start selling compatible ones. I've never really been a huge fan of the iPod and really only got the iPhone because I wanted Internet connectivity and lossless playback. If you're willing to sacrifice some battery life, I'd go with the Creative ZEN Stone Plus. It's about the same size as the G2 Shuffle and has 2gb of storage. However, it features a display, audio recording, and FM radio. Creative's MP3 players have always had vary good audio quality too.

Source: Dailytech

Update: IFixIt has taken it apart already. As expected, there's not a heck of a lot to this thing. Everything is now controlled by a single chip containing the ARM CPU, a small amount of RAM, and 4gb of flash memory. This seems to be the direction Apple is going with it's products.
iPod Shuffle 3rd Generation First Look