Although I agree with your broader point, the iPod actually seems like a terrible example to me. They did innovate a ton- the mini, the nano, thin nano, fat nano, square nano, chewing gum shuffle, square shuffle...
True, true. My thoughts were along the line of the Classic - from year to year they didn't innovate much along that one line, but you're 100% correct they innovated to fill more niches with new lines.