Guys, Apple could make a Touch with everything the iPhone has except the phone and it would not compromise iPhone sales one bit.
Why? It's simple. Touch owners don't want to have a $2000+ contract over two years. No matter how much better the iPhone is than the Touch, Touch owners aren't interested in the iPhone because of that one thing: the contract. Vice-versa, no matter how much better the Touch is than the iPhone, iPhone owners want the phone part and the $2000 contract.
The Touch and the iPhone are two completely separate markets that affect each other basically nil.
Why? It's simple. Touch owners don't want to have a $2000+ contract over two years. No matter how much better the iPhone is than the Touch, Touch owners aren't interested in the iPhone because of that one thing: the contract. Vice-versa, no matter how much better the Touch is than the iPhone, iPhone owners want the phone part and the $2000 contract.
The Touch and the iPhone are two completely separate markets that affect each other basically nil.