They need to get rid of that look. The rounded edges and flat body makes it look like an outdated iPhone. They should have kept the sleek look like they have with the iPhone 3G and 3G, just update the way it looks that all.
I hate to point this out, but it actually brings the design in line with other Apple devices (square sides with rounded corners): Mac mini, Apple TV, Time capsule and Airport as well as to an extent the iPad, Macbook Pro, etc etc. I think this is the way Apple are going design wise to reinvent all the product lines, so don't be surprised if the next Touch looks really similar.