Apple has also used today's event to launch a new line of iPod mini's called the iPod nano.
Jobs calls the iPod nano "an entirely new ground-up design, that also has 1000 songs in your pocket".
The white or black device features a colour display and can support photos, uses a grey click wheel to navigate, and is 80 percent smaller in volume than the original iPod - thinner than a number two pencil, said Jobs.
Compared to the iPod mini, the iPod nano is half the thickness and 62% smaller by volume. It uses a 30-pin dock connector, so the iPod nano plugs in to existing iPod accessories.
The iPod nano also features a new graphical clock, games, stopwatch and lap timer, and a screen lock that uses the click wheel like a combination lock.
"White is our signature color for the iPod ... but we decided to so a second color, and we tried it because it looked so cool", said Jobs, "so we're doing a black model as well".
The iPod nano ships today in 2GB and 4GB models for $199 and $249 respectively in America and in the UK the nano will cost £179 and £139.
Strangely Creative already have an MP3 player called the Nano Plus.