The article, later quoted in the New York Times says:
"We have heard from an inside source who claims the camera version of the iPod Touch 3G will be released this Spring. The source confirms to us that the iPod Touch 3G with camera had actually been planned for release this past September, but had problems passing quality control."
According to the source, the iPod Touch camera will be the same as the current Nano camera, which takes video but not still photos. There's no word on a possible release date, though I'm curious if Apple would release another iPod Touch upgrade so soon after the latest version's September debut.