Though the iPod Touch and iPhone have similar hardware, this video shows what differences can be found in their user interfaces. Video after the break. Click here for more pictures.
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