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I own this product and so can talk with experience behind me. I believe that if you can't afford and iPhone, you should buy an iPod Touch 32gb, because it has many of the same features.
32 gigabytes for video, music, photos and apps
Wifi for internet browsing, Google Maps and Weather
Clock, Calculator and Notes
The touchscreen interface is pretty much flawless and I very much enjoy playing around with iPod simply to enjoy the ease and technologically advanced touch. The screen is quite large at about 3.5 inches across and the accelerometer is an ingenious piece of engineering enabling you to see movies and photos in a widescreen. However typing is quite hard and needs some getting used to.
The 32 gb space was ample for me as I only have about 1000 songs, two movies, no photos and a few apps, so I know problem with the space provided. However some people may not find it enough as it is an iPod, and some iPods can store up to 120gb. So if you have many many songs and movies, the iPod Touch may not be the best thing to go for.
The wifi is a brilliant addition to the iPod range and the iPod touch is the only iPod that can currently connect to the internet through wifi. This is an excellent use if you already have wifi at home or have a laptop that uses paid wifi netweorks such as Cloud or BT Openzone. I found it really useful in foreign countries to use Google Maps to get from A to B. I think wifi and internet browsing is a great innovation in the iPod touch and looking forward to the next one.
The applications were very eagerly anticipated part of the iPhone and iPod touch, because it allowed independent developers to develop games or applications to use with the iPod Touch. A great idea, but when it became reality the quality was quite poor. Most if not all the free applications are poor and only a few of the paid applications are of a satisfactory standard. A real disappointment.
It is much smaller in space than some of the iPods on the market, but if you want something new, innovative and stunning, the iPod Touch is for you and you also get the wow factor that Apple in general has, being very much in fashion and the cool thing to have.
Is it worth the money? I thought so, but I still thing I paid a little to much just for the apple brand. If you want a well rounded, but slightly expensive multimedia player, I think it is a good buy and I recommend it.