I would personally recommend an iPhone. Around the time of the iTouch release, my roomate bought the ipod touch, I bought the iPhone. Here are my observations.
Initially while I had to hack it a bit to activate, I was immediately able to use Mail, Calendar (with ability to add dates), Google Maps, weather, stocks, notes...
Now, things have changed because the iTouch is easily jailbroken and can now run all of these apps.
However, there are still major differences assuming both are jailbroken and running their respective 1.1.1 firmwares. (neither of have us have gone 1.1.2)
The iTouch will NEVER have: Bluetooth, a camera (no pictures or future video recording), physical buttons on the side (which are very convenient to control volume in your pocket/without looking), ability to pause/play/skip songs with the provided headset, microphone (so no VNotes (voice note recorder), or potential future Skype), speakers, and phone capability (even if you don't plan on utilizing this until later). My roommate and I have noticed that he also has less battery life and a slightly poorer quality screen.
However for the same price ($400), he has twice the storage (16gb vs my 8gb) and a smaller device.
You should also note that the iPhone also comes bundled with an external power adapter and dock, which is not included with the Touch. (This alone is about a $50 value)
For me, after making this list, even after the great jailbreaking progress and the extra storage, the iPhone still has better bang for the buck, and future potential because of all the extra hardware.
All in all, I am very happy that I made the decision I did. I hope this helps.