Hard to tell when one does not own both but wife does have new iTouch.
As for my entry level smartphone the HTC desire, it functions admirably with the Andriod O/S. Though slightly paranoid about scratching the screen and hope somebody comes out with a clamshell varient. Was prone to stuttering when I first started playing with it, adding dozens of apps did not help but once removed things worked smoothly pretty much like any PC.
Despite the smallish capacitive touch screen and fat fingers the virtual keyboard works exceptionally well
Tip:
a rolled piece of anti-static plastic works rather well as a stylus for capacitive screens, resistive ones will put up with any blunt object
Currently Operates for me as:
a cell phone / camera /video camera
GPS tracker
wifi scanner
web browser/ email client
web server (html only) - will be experimenting with that later this year
Able to create Wifi hotspot locally
Plays mp3 and flv video files