The iTouch, besides having a suggestive name, is just too much for an MP3 player. I don't know why I'd ever use one. The iPod is better for someone like me who doesn't need a bunch of extra stuff that they'd never use.
I have an 8 gig iPod Touch as well, and I will tell you I didn't buy it to my be main mp3 player. I run with my 20 gig Creative mp3 player that I got like 5 years ago, and it does the job just fine! As Ernie states, there is so much extra stuff on the i pod touch---that's what I got mine for! I love the wifi & silly little apps! Plus...if you deiced to jailbreak it... it's even cooler!!
If only we could play AG on the i pod touch... *day dreams*
I still use a 2nd generation iPod Nano. 4 gigs, which is hardly anything these days. I got it for free when I got my Mac, so I'm not complaining. Hmm, I should start looking for a new one since this one probably won't last too much longer.
I would go with iPod, because I would just like to listen to music at a cheap price, thats portable, rather than a whole big [hone like music player with different applications and access to the internet. Cheap stuff is always the best. :P