This information has come from three independent sources close to Apple: expect a large screen iPod touch device to be released in the Autumnl of ‘09, with a 7 or 9 inch screen. Prototypes have been seen and handled by one of the sources, and Apple is talking to OEMs in Asia now about mass production.

Apple has been experimenting internally with large form tablet devices for years, one source says, but there was concern that users wouldn’t like the device. The difference now is the iTunes app store, which has thousands of games and other applications that are perfect for a touch screen device with an accelerometer. Apple says more than 300 million applications have been downloaded since the App Store launched in July 2008. Combine the App Store, iTunes and a browser and you have one heck of a device.

We don’t have any information on pricing. The current iPod touch, with a 3.5 inch screen, starts at $229. The 32 GB model is $399. We expect the price on the larger iPod touch to be significantly higher.

Apple rumors, particularly Apple tablet rumors, tend to come and go. I’m not saying Apple is definitely launching a large form iPod Touch. But trusted sources  are saying they are currently planning to, and one source has actually held the device.  source