When the Touch was first released, I was excited...except for one thing. I had a 30GB iPod and all my stuff took up about 25GB of space. I'm the type who likes to have my entire music catalog on my iPod. I decided to wait until the 32 came out, but was a bit surprised at the price.
That is, until I thought about the fact that it isn't JUST an iPod. With the added features of a web browser, email, google maps, and other internet-based features plus a MUCH better screen, I figured I was getting a lot more than just an MP3 player.
It's still expensive (32GB flash ain't cheap) and took a lot of convincing to get, but it was worth it for me.