Steve Jobs asked the audience, "What if you ripped your CDs and don't have the covers?" I'll tell you what, Apple will provide you with free album art with a valid iTunes account, that's what.

There is also a "cover flow view" being added to the iTunes interface. Engadget swears it looks like flipping through a CD rack, which sounds like heaven to me.

Apple is also bumping up the video resolution system wide, and according to Jobs, everything will be available in 640x480, up from 320x240 (that's a huge difference visually).

The NFL Network is coming to your iPod, $1.99 a game for highlights or $24.99 for a season pass and all-you-can-eat games.

iTunes 7 will also "cycle" video for you. When you get a new, unwatched episode of your favorite show, iTunes will automatically archive the oldest watched show off your iPod, and replace it with the new content. Sweet!

Engadget says of iTunes 7, "The new layout of iTunes 7 is hard to describe verbally. It's the same but different -- tidier, cleaner, more whitespace and more obvious organization of items. It's as if design guru Jeff Bekes gave it a makeover"

Movies! The predictions were right, movies coming (and, they'll have the same usage rights as TV shows, whew!). The first studios on board are apparently all Disney owned (Disney, Pixar, Touchstone, and Miramax). Opening with 75 movies available, and new titles available same day as DVD releases. Prices will be "$12.99 if you pre-order them or buy them during the first week. Other movies are $9.99." Jobs says 30 minutes to download a 640x480 movie encoded in H.264 over broadband but, you'll be able to start watching at your computer within a minute of your download beginning. (Talk about movies on demand.. To quote Paris Hilton, "that's hot")

Update: And, "one more thing" the rumored iTunes to TV gadget will be out in 2007.. Engadget for details as that's really not our bag.

Thanks Engadget!