Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_0_1 like Mac OS X; en-us) AppleWebKit/532.9 (KHTML, like Gecko) Version/4.0.5 Mobile/8A306 Safari/6531.22.7)
The new Touch is a nice device, plus you won't have an extra fee (tariff?) for data like you would need/want with the iPhone.
However, the nicer screen, the MUCH better camera, the doubled RAM and general all-in-one goodness of the iPhone 4 make it the better choice in my opinion.
As an added plus, the iPhone makes it easy to use data driven apps without depending on wifi.