N800 - USD226
2 x A-Data 16GB SDHC - USD150
Toss in a BT headset and you have a 32GB device that you can use to:

surf the web - youtube, facebook, full google apps
watch videos offline & online
listen to music
chat with buddies over IM (MSN, Yahoo, AIM, Jabber, GoogleTalk, etc)
make internet calls over GoogleTalk and Gizmo
view pictures
lots of free software
hook up with external GPS receiver with maemomapper/Maps
hook it up to a BT keyboard for extensive text input (documents/spreadsheets)
download pics from my K800i (3.2MP camera phone) or E51, and blog with pics on Blogger

Now sure I'm missing out much from not having an iPod touch, and I have so much more freedom now that I have an external AA battery source.

Granted, some people feel that the UI on the iPod Touch is far more user-friendy, but that's very subjective. I'm far more comfortable with the N800, after trying out my wife's iPod Touch.

So, the USD20 that Mr Jobs wants to charge for is to get the iPod Touch up to par with the iPhone sans GSM/CDMA radio?