iFixit

The bottom of the logic board.

Apple has done an impressive job of packing functionality into the headphone jack. The dock plug has three conductive strips, plus the ground post. It's safe to assume that the plug is multi-modal and switches between USB, analog audio, and possibly power modes. The separate power mode may not be necessary if they can get enough juice off a 4 conductor USB connection.

It should be easy for a third-party developer to make a small USB adapter that restores the memory-stick functionality of the Shuffle.