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The iPhone and iPod Touch are two very similar devices. Aesthetically speaking, they are almost identical, with the only differences being iPhone's silver lining and iPod Touch's slightly smaller and thinner physique. With the two both having very similar price tags, people often land in a debate with themselves arguing over which is the better buy.

The 8GB iPhone was recently slashed to a very affordable $399, a massive $200 reduction from the somewhat hopeful asking price of $599 (and that's before AT&T fees!). Steve Jobs introduced the price cut by stating "we want to put iPhones in a lot of stockings this Christmas" -- and that they will. Unfortunately, a $200 reduction is a far cry from what you'll be forking out to AT&T every month. Yes, buying an iPhone means you'll be locked into a two year long contract with AT&T, paying a minimum $60/month. That is, of course, unless you wanted to spend even more money on an unofficial legally-questionable unlock that'll free you from AT&T's grasp.

The iPod Touch, on the other hand, lacks the phone functionality (so obviously there's no contract required). For $100 less you're essentially receiving only the iPod and web browsing functionality of an iPhone, thanks to built-in WiFi. It's unfortunate that so many features and applications were excluded from the iPod Touch -- the addition of a camera, even if it wasn't as "perfect" as the iPhone's, would really justify the asking price.
With that being said though, custom-built applications would more than likely be conceived as both devices run off the same operating system.

So what should you buy? It all depends on personal preference. If you already have a phone but would like something with mind blowing "multi-touch" features, go with the iPod Touch. If you're browsing around for a new phone, look no further than the iPhone. It is, without doubt, the best smart-phone to date.