One of the major complaints about iPhones (other than the price) has been the 8 GB memory barrier on the iPhone and 16 GB on the iPod Touch (which is basically an iPhone without the phone). Apple addressed that to some degree today by announcing the availability of a 16 GB iphone for $499 and a 32 GB iPod Touch for $499.
You obviously pay a serious premium for the convenience of having your phone and iPod in a single device, but even a 32 GB Touch seems paltry compared to the 80 or 160 GB you can get in the iPod video. I'm guessing that Apple wants to keep other models viable so it has to offer some differences among models. If you want a ton of storage, get the Video If you want the nice screen and the touch capability, get the Touch.
I'm strongly considering an iPhone when my contract expires in August, but I'm still having a hard time justifying spending that kind of money for a phone. I've considered getting a Touch because I like having a WiFi device in my pocket, but I figure if I'm spending the money, I might as well get a phone too. It's a dilemma that's for sure. Now the 16 GB model just makes that decision a little harder.
I'm right there with you. I'm eligible for a new phone now, but the pricing on the iPhone is still a bit high for my taste. Yet having a pocket WiFi device that is also a phone/all-in-one gizmo is very luring. I'm happy with my Sony Ericsson Walkman phone, but it's starting to show its age. I have all sorts of deals and offers from AT&T, but all of them exclude Apple pricing, which rubs me wrong just a bit. I can get a Crackberry for less than half the price of a cheaper iPhone with the deals... but a Crackberry doesn't give me what I want.
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