I have an iphone, and I would have to say the iphone is the better option, however, the finacial aspect is really the deciding factor. The iphone is a $200 from the start and $70-$100 a month depending on what you plan is. All Iphone plans require the data package which has unlimited internet. The iphone will get the internet pretty much everywhere you go unless you go in a solid building or go to the country or a cave. The ipod touch is $400+ from the get go and there is no month to month fee but there are charges when you purchase music from itunes and use the app store. The internet is essentially free if you already have it in your house they it will remain the same. Wifi is limited to your house and any place that has -FREE- wifi, which is very few. You want optimal internet use then the ipohone is the way to go, if its affordable. But, if you dont mind being restricted to your home then the ipod touch will work. The new iphone has wifi, the edge network and 3g. WiFi is of course WiFi. The edge network is the AT&T basic internet service. 3G is AT&T high speed internet. 3G is fast but currently 3G does not have a lot of coverage. The edge network has massive and works decent if you have a strong signal. I personally have not had any significant internet problems using the edge network, it can be slow sometimes. The ipod touch has a larger memory, 32gb where as the current iphone only has 16gb.