AppleInsider | Apple exploring shrunken audio jacks for even smaller iPods:

In its continuous pursuit to create smaller, more compact devices, Apple has shown interest in creating headphone jacks for iPods and iPhones that will take up even less space inside a device.

There's one standard in the iPod, the headphone jack. It makes it possible to buy replacements in a pinch for a dollar. You can plug them into any car stereo with the jack. You can buy cheap cables to hook them to your home stereo.

Apple wants a cut of each of those -- your headphones, your car stereo, your home theater. Tell them no.

EDIT: Or I'm wrong. This is just the way the current jacks are held within the iPod.