Cell Phone Network

• The iPod Touch cannot connect to a cell phone network. But it does provide Wi-Fi access that you might be able to use in a manner similar to cell phones, using a piece of software called Truphone.
  
  

Initial Cost

• The iPhone will typically cost substantially less than an iPod Touch because cell phone companies traditionally subsidize the price of a new phone. They absorb some of the cost up front and make it up later through subscription fees.
  
  

Long-Term Cost

• While the iPhone is typically less expensive, it requires a data plan through AT&T (in the United States), which comes with a monthly fee. Over the course of a year, an iPhone will end up costing more than an iPod Touch.
  
  

Access to Apple's Online Stores

• This data plan is unlimited and allows you to access the Music Store and App Store from any location that has a cell phone signal. An iPod Touch can only connect to the Internet through an available Wi-Fi connection.
  
  

Refurbished Options

• You can buy refurbished iPod Touches from Apple's website or any retailer that's approved by Apple. A refurbished iPhone can only be legitimately purchased from AT&T in the United States, and it requires a contract.