You should really look at the iPhone objectively, respectfully a lot of your assumptions may be influenced by the bogus and uninformed mainstream media reports
Ok, can you please not start a comment like this with what's effectively an insult?
honestly I was in the same boat as you when I was deciding on an iPhone. With your current carrier, you are most likely locked in for 2 years anyway, same with the iPhone so what's the diff?
Actually, I'm not. And my choice of carrier and desire to be able to pick carriers has nothing to do with contracts.
I use T-Mobile because, in this area, T-Mobile is good and AT&T isn't. AT&T's network appears to be oversubscribed and as such the quality of the network is so low it's often unusable. I base this on experience of both networks, and carry an AT&T GoPhone SIM around as a spare for those (increasingly rare) occasions that I can't get a T-Mobile signal and can get AT&T. I was on AT&T on a standard plan until about two years ago.
A one bar T-Mobile signal here in Martin County, Florida, is usable. You can hear what the other guy's saying. A one bar AT&T signal, using the same physical phone, isn't. I have to assume AT&T is using the half rate codecs (probably AMR-HR) which degrade very badly compared to the full rate codecs.
So you saying that there's no difference because of contract length is really not covering major issues that are serious to me. As far as I'm concerned, contract length is an issue, but a usable network is even more important. In some areas AT&T is good and T-Mobile is bad. Not here. And even if the reverse was true, I'd still like to decide for myself which network to use, not be forced to tie my hardware to a particular carrier.
Having the iPhone play music does not really take up that much battery juice. Even if it did, chances are that you are near a charger nearly all the time - wall plug, car, etc. And to be honest the charging is very fast, much faster than my clumpy ole 30gig video iPod!
That's good, though it's still not something I want to trade off one for the other, especially given my experience of iPod batteries, which after a year or so seem to plummet in life. I've been through the iPod battery self replacement process before, it's something I thought would be easy before I did it, and I added my name to the list of apologists on the subject. Then I did it. There's a reason why my current iPod still has a 2-3 hour battery life - I'm dreading replacing the battery, and actually considering buying a whole new MP3 player instead.
Keyboard is way better than you think it is.
If I'd said "Teh iPhone's keyboard sucks, I'd rather type "733442777pause777444" than "peharri" it's so much easier", then yeah, you'd have a point, but I'm talking about physical feedback, when you're holding the phone and dialing with one hand. If I'm using something as a phone, I want it to be a good phone. The iPhone's requirement to use a touch screen to dial out is a compromise that helps the non-phone functionality at the expense of the phone functionality, it isn't an improvement. It means hand eye coordination is a requirement.
Voice recognition seems more like a nice-to-have than a must-have feature. Cool yes, required probably not.
It seriously affects how usable the phone is. I consider it a must-have even if it isn't for you. I live in an area in which you can't get from A to B without driving. With a decent hands-free kit and voice recognition, the phone is usable, without one or the other you're another dangerous lunatic on the road if you so much as touch the phone.
MMS can be done via hack apps, hacks are now super simple to do, especially with iBricker and iFuntastic, ignore the mainstream press about the 20 pages of instructions, it's simply not true anymore.
If hacks weren't an issue, the initial complaint about the phone being locked wouldn't be either. I do not want to buy a device relying upon functionality being present that can be wiped out with a software update. It is not clear at this stage what Apple's plans are with iPhone, but they've previously given every indication that they consider it a closed platform. I can see iPod Touch being immune from deliberate tampering to disable hacks, if only because there's no carrier out there to enforce updates. But iPhone?
One last thing, try to think of the iPhone/iPodT's as a pocket computer. They run Mac OS X have a very powerful CPU a file system, input and output, etc...software possibilities are endless, bend your mind, it's a freakin mico-mac, man!
But that's not what Apple wants you to think, and with Apple's history of wanting control over the whole widget and whole user experience, it's not clear that either device will ever function as a "full computer" with Apple's blessing. (And it's no different to iPod in that respect anyway - my iPod has a
full version of GNU/Linux installed. As such it's as much a full computer as iPod Touch with OS X) iPod Touch is exciting (or would be) because there's no risk of it being permanently tied to Apple, like iPod, and unlike iPod it has significantly better hardware.
But there's no Bluetooth. So I'm not going to be able to use it in the way I want to use it, as a portable Internet/Multimedia device. Sure, some people will. People who live in large cities with a Starbucks on every corner will love it. Good for them. I'm not really living in that kind of environment, so at the end of the day I have to look at it as a cool looking iPod with some gimmicks that'll be useful from time to time but I'll never really be able to rely upon. Is it better than an iPod classic? For me, probably not. Is it more useful than my current iPod? For me, in terms of the features it offers, it's probably worse save for the temporary fix to my battery problem (which we'll replay in 12-18 months...)
Certainly, if I'm to look objectively, I would be better off getting an iPod classic (cheaper, more storage, USB storage mode right off the bat), or waiting for SD cards to get to a decent enough size and then get a Nokia N800.
But if Apple were to add Bluetooth to the iPod Touch, and it was clear enough OS X functionality was there to make it possible to set up a PPP over Bluetooth connection to a phone that supports GPRS/EDGE/whatever-the-CDMA2000-equivalent-is, I'd definitely take a second look.