Like stated before, viewing angles are not big of an issue in small screens. I care about screen quality the most, and unfortunetly TN panel will not give such colorful and vivid bright colors and pure true blacks as IPS screen in iPhone4. Quality-wise, screen in iPod touch 4gen is the same as those in 2/3gen, it's got only higher resolution, but quality is the same.
See. Maybe it's me, but when I see black on a display, of any type - Macbook, iPad, iPhone, (*random other manufacturer), etc., I have NEVER noticed that "Hey, this black looks terrible". And I doubt that 99% of people will ever care. Come on, this is a moot point.