From engadget:

image Heads up, Zune fans ? some new product is heading your way sooner rather than later, and we suspect there?s more than a couple of things to get jazzed about. According to reports from a ?source? inside Microsoft, a new batch of Zunes (AKA Zune 2, Draco, Scorpio, etc.) are due out on October 16th (just in time for the holidays), in both flash memory- and hard drive-based forms. The new, smaller, flash Zune (the Draco) will be hitting shelves in pink, red, black, or army green colors, will have a 4GB or 8GB capacity, and will feature a ?squircle? (the source?s term, not ours) for navigation, which won?t have a center button but can be pushed, ?From any side.? The hard drive-based player (the Scorpio) will be available in 80GB, sports the soon-to-be infamous ?squircle,? and touts a screen which the source claims is ?awesome? for video.

Source: engadget