iPhone versus iPod touch pricing: Say what?

What does it mean when a 16GB 3G iPhone costs about the same as an 8GB iPod touch? Is it the AT&T kickback economics finally coming into reality? Or are we going to see an iPod touch price drop sometime soon? Face it. The iPhone is just a better device than the iPod touch. And if you can get one cheaper? Why not. It has a built-in speaker and microphone too, assuming you can get past that activation screen.

So if you have the choice between buying one or the other, the iPhone is a really sweet alternative. And if the iPod touch comes down in price? Even better.