Although my friends and family think I'm crazy, I've been a stern advocate of this approach because the cost/benefit ratio is simply not in my favor (as in, not even close...). I honestly believe that a smart phone with today's carrier plans (assuming US, I don't know what it's like internationally) is a complete waste of money for the majority of people out there...but that's solely the opinion of an accountant minded individual...anyway...
Unfortunately, I am also a minimalist, and carrying around two devices when they could be combined into one directly conflicts with my financial judgement. The camera on my 3rd gen touch is less than adequate, although in the grand scheme of things, that isn't that big of a deal. What I miss the most though is GPS. I'm old enough to remember the times getting around without GPS (do people still remember carrying around paper maps? I had to do that for a job once...), but I'm not going to lie...GPS is pretty convenient.
This has led me to my current position where I would almost be willing to take the financial hit (on second thought, no way) to satisfy my minimalist side, along with obtaining some nice extras (superior camera, GPS, uh...I suppose some other stuff...).
I suppose the only solution to all of this is to increase my revenue stream to the point where the utility expense of having a smartphone becomes immaterial...