iPod Touch: 
 iPod Touch The original iPod Touch lacked email and applications (other than Web apps via its Mobile Safari browser), and it had other deficiencies, as well: no volume buttons, no speaker, no camera and no Bluetooth, although it featured WiFi networking, along with USB. As a media player, this iPod Touch was limited to 8 or 16 GB of storage vs. the iPod Classic's 80 or 160 GB capacity.

Today's second-generation iPod Touch improves a bit upon the original hardware, but it was the 2008 introduction of Apple's iTunes App Store that has turned the device into a full-fledged mobile computer with tens of thousands of third-party applications available.

To date, the iPod Touch is the only device other than the iPhone that works on Apple's mobile application platform. And that is the reason to buy one.
Platform

The iPod Touch uses the same operating system as the iPhone, which is a (massively) slimmed-down version of the "OS X" operating system used for Apple's Macintosh computers. The Mobile Safari browser is based on Apple's desktop Safari browser (though it doesn't support Flash content), but the user interface is completely different. The iPhone/iPod Touch UI is designed from the ground-up for fingers and small screens rather than the mice and relatively large screens of desktop and laptop computers, and every other phone vendor has been scrambling to catch up with it. [See our first iPod Touch review for more details about the underlying hardware platform and user interface, as well as our iPhone reviews, listed in the "Links" section below.]

In 2008, the year after the iPod Touch's debut, Apple rolled out "OS 2.0" for its mobile platform (dropping "X" from its name). Aside from some performance improvements and bug fixes, the real news was support for Apple's new iTunes App Store, which opened up a whole world of third-party apps, drastically expanding the usefulness of the device and justifying many more purchases.
In other words, iPod Touch is not a Walkman-like, single-purpose device. It is an evolving, general purpose computing platform that fits in the palm of your hand.
OS 3.0

iPhone OS 3.0 is due this summer. Like OS 2.0, it should run on all previous iPod Touch models, with an upgrade price of $9.95. Apple gave a public preview, focussing on features for developers but also showcasing new features for end users. Notable enhancements include MMS messaging (to support sending and receiving pictures, contacts, audio messages and map locations); voice memos; calendaring enhancements; cut-and-paste (like Mac OS X has); and a new Spotlight system for searching the iPod's contents (including third party app data, if the developer writes a plug-in).
Other anticipated features include WiFi auto-login, support for Stereo Bluetooth headphones, Notes sync, Safari anti-phishing security improvements and form auto-fill, improved parental controls, true YouTube login, and the ability to get movies and TV shows directly from Apple's store without having to use your Mac or PC to buy-and-sync them over iTunes.
Apple also promises a developers' interface to the Dock port in OS 3.0 for enabling custom hardware and software access — think audio recording, data acquisition, 3G cellular data or fax modems... and ultimately anything the homebrew hardware community can dream up! (A little keyboard, like the fold-up ones that used to be made for the Palm III and Palm V series, would be quite welcome.)
But, as we await OS 3.0, what does the second-generation iPod Touch have for you today?