And why not? Your saying so makes it no more true. To quote iMacmatician, and also what I myself have said numerous times:
"If I wanted an Apple phone, would I be looking at an iPod touch?
If I didn't want to pay a $2000 contract, would I be looking at an iPhone?"
The two are completely separate markets, which do not compete with each other AT ALL. Period.
EDIT: In fact, I'm making that my sig.
I'm not agreeing with either of you here, but say a person wants an iPhone. If the iPod Touch was designed like the iPhone without a carrier, but included CPS and Camera features, I would be discouraged from buying an iPhone. Instead I'd buy the iPod Touch and a cheap phone.
If you were to categorize the iPhone and the iPod Touch, they are in separate fields, one being a phone, and the other, a multi-media device. However, if both were completely identical excluding calling features, then one might be convinced just to buy the $300 iPod Touch, and have another cell phone.
As much as I'd like to see an iPod with GPS and Camera capabilities, I don't know whether it would still be an iPod. Then again, the iPod market is evolving, so it is a definite possibility, so I'm not going to rule that out. However, the iPhone should be considered exclusive, and should have more features than an iPod should.