The cellphone will probably have an mp3 player too. Why have the iPod at all?
It's a big deal because as a platform Apple is letting the Touch stagnate. It's being held back to keep from competing with the iPhone and if they keep it up they're going to lose, spec wise, to other platforms. The silliest part is Apple promoting it as a gaming platform... while people do play games on them, that's hardly the main thing people are doing with the Touches. And it certainly isn't the number 1 handheld gaming platform, despite Apple's disingenuous comparisons to the DS... which, by the way, has a camera.