The only mistake Apple made was releasing the iPhone before the Touch. If they had released the Touch first people wouldn't be crying about little things it doesn't have compared to the iPhone and would be amazed by the multi-touch user interface and wi-fi w/ safari.
Very good observation. Much better idea to add and build upon a product to produce a new model, rather than strip one down.
iPhone: PHONE.
iPod: MUSIC PLAYER.
THEY ARE DIFFERENT. It drives me absolutely insane when people diss it because it's not as fantastic as the iPhone. Think of the original iPod, then rethink your statements about it.
iPhone: PHONE.
goes here <-------------------------- iPod Touch
iPod: MUSIC PLAYER.
And are you saying we should all be comparing the 2007 iPod Touch to the six year old 2001 iPod to appreciate its features?
Personally, I believe it makes more sense to compare it to a similar 2007 product, say, hmm, let's see now, what's similar.... oh, I know, an iPhone!