When looking at the iPod Touch, you have a choice: you can either see it as an evolutionary leap for iPod, or a slight downgrade from iPhone. You gain a thinner shell, up to 16GB of storage, but lose a bunch of apps, the phone, and some other surprising things. In our opinion, it's both the leap and the downgrade, and therein lies the rub.
• Physically, it's almost more of an attention grabber than the iPhone, at about 2/3 the thickness and wearing the signature iPod chrome jacket. Yes, the back is more prone to scratching, but it's oh so shiny. Removing the recessed headphone jack was also a smart move, as you no longer need compatible headphones, or a silly adapter to make it work.
• Much of the iPhone experience remains intact: the wonderful multitouch navigation, the supreme Safari browser, the ease with which you can sync to iTunes, then grab and go without that annoying Eject delay. New minor features like adding a period by double tapping the space bar and bringing up the music HUD by double tapping the Home button are both welcome additions that make using the iPod Touch even easier.• The iTunes WiFi Music Store is thrilling to use. Not only is it easy as hell to find a song, click its animated icon for a preview and download it, in seconds, to your iPod; it's also impressive how it syncs back to your computer's iTunes library without any weirdness.
*No video downloads in iTunes Wi-Fi Music Store, no wireless syncing to iTunes, no external speakers, dumping the calender, and no Mail or Notes apps. This falls into the same category as our bitching about the lack of stereo Bluetooth A2DP on the iPhone: would be nice, might happen with a software update.
The bottom line, if there is one, is that this will certainly be a great product for people who are unable or unwilling to sign up for AT&T. But spending $399 on the 16GB touch is not better than spending $399 on an 8GB iPhone. There are real reasons why the iPhone is a better iPod than the touch, especially now that both will have equal access to the iTunes Wi-Fi Music Store. Choosing the touch over the iPhone is like choosing a fully loaded Toyota Avalon over a Lexus ES.