If you could buy a 100gig iPhone, or a 100gig iPod Touch...which would you buy? They do the EXACT same thing (in theory) other than make phone calls.
I would buy the Touch iPod, hands down. You're making the logic mistake of assuming everyone has the same usage habits and requirements as you do, which is clearly not the case. There's a list of reasons I'm sure we could collectively come up with why I'd want a phoneless iPhone, but here's the one's I can think of off the top of my head in 30 seconds or less:
I don't want AT&T as a carrier. I LIKE my current phone (it's a ruggedized bar phone with no moving parts, excellent battery life - I recharge once every 10-14 days, it gets great reception, it has good audio quality). I don't want long phone conversations to drain my iPod/entertainment battery. I don't want watching LOTR extended edition to mean I miss an important call. I don't think paying $100 more for a phone in my iPod is a good value (my aforementioned phone that I like very much thank you was $50 with contract).
I would LOVE a Touch with 16-32gb (32gb would be nice, 16gb would be adequate) of memory, wifi w/ full broswer, full PDA features, and "normal" iPod features (music, video, photos, etc). I'm entirely uninterested in an iPhone, though. Just because YOU think something doesn't make it the case for everyone.
Safari is only on there because of the bastards that actually charge for wifi and make terrible html wifi logon pages.
People that charge for wifi, or even password protect it, need to drown slowly, although you future touch owners should thank them.
I'm going to ignore you comments about the Touch and focus on this statement. You think people who charge or even password protect their wifi are bastards that should DIE?
Ok, first off, you are aware that it costs money to have an internet connection at a facility, right? And that buying and maintaining a wireless AP costs money, too, right? If someone wants to charge other people money to use something that costs them money you think they are bastards? WTF kind of logic is that?
I'll agree that when places open up their wireless access for free it's NICE, and may be a good business move for them since it makes people more likely to visit their store, but it's THEY'RE decision and they're justified either way they go on it.
As for people who "even password protect" their wireless... well, I don't want people using my bandwidth, for one. I pay for it and I often use it to download large files, etc and I'm not keen on waiting longer to complete that download so that some freeloader can use MY connection. Not to mention the legal liability that you're open to if someone uses your AP to do something illegal and you didn't make any effort to secure that connection. It may or may not hold up in court, but who wants to go through the hassle?