FWIW, I have an iPod Touch -- the kind with the largest memory, 32GB, IIRC. Tullio has an 8GB Touch (that he won as a prize!). I love my Touch, which is able to use many of the same programs as the iPhone (including that bird encyclopedia, which I also bought).
The Touch is not a phone, and it doesn't have a camera built-in... but... it does allow you to access the internet via WiFi. And if you are really a cheapskate, then you may not enjoy paying the monthly fees that AT&T charges for iPhone -- look it up at wireless.att.com -- I looked at the costs the other day and am now rethinking how badly I really need this device.