My personal prediction is that we're going to see the DAP/PMP market shrink considerably over the next few years. As Wi-Fi hotspots start to fill in and high bandwidth cell networks get better, the phone market will continue to offer all-in-one "smart devices", allowing for music and video subscriptions on a streaming/download basis. For the vast majority of the population, these will be the "it" items for portable media.
In terms of DAPs and PMPs, I can see them branching apart. Standalone media players will focus on either music or video, maybe both. With my prediction above, that leaves both, the videophiles AND audiophiles looking for a product that suits their more demanding tastes. Bigger screens, resolutions, capacity and codec support will be the name of the game for portable video, but more likely than not, the Netbooks will fill this gap.
As for pure audio, I think we're either going to be left in the dust, or you'll see more niche products start to surface. I would LOVE to see, just as an example, a high-profile audio company come up with a "DAP-Transport". A tiny device, solidly constructed with minimal, high quality parts intended specifically to be connected to a DAC and amplifier. Can you imagine a purpose-built, high-end, truly portable "component system"? Sadly, that's not likely to happen and more realistic a prediction would have the DAP market relegated to bargain-basement, single line OLED displayed, low capacity tossarounds.