Get the iphone. Once you realize how useful the iPod touch is for internet quick lookups, you'll want the 'internet in your pocket' 100% of the time. Only the iPhone can deliver that unless you live in a perpetual Wi-Fi cloud.
If your contract is up on your cellphone, it's time to step up to iPhone. You then have one device in your pocket.
I own an iPod touch, and as soon as my Verizon contract is over I'm switching. That day. Right when the AT&T store opens.