The iPod touch was a compromise introduced by Apple for those who did not or could not get a cellular plan with AT&T. The iPod was Apple's effort to give people a mobile device, minus the phone and cellular data for those who either did not want to to do business with AT&T or for those who got very poor service or no service from AT&T.
It was never going to see major investment beyond its initial short intended life span.
The iPod lineup, in general, became more or less an accessory device after the iPhone became the enormous success it would eventually become.
Yeah, the iPod Touch should never of had "iPod" in the name IMO.