I'm not a pathetic Apple fanboy like most of you here, but I'd have to say, Apple has made the right decision here.
After adding a camera to the iPod touch, what should be the next thing they add? GPS? They've already added Bluetooth and a Microphone. Suddenly there isn't all that much separating the iPod Touch from the iPhone. They are wise to keep these two devices apart.
The only problem is that Apple is not allowing people to buy the iPhone outright, rather couples it with restrictive plans on a single network in most countries. But that's typical Apple - anti-consumer with a "do what you're told" attitude.
TomTom's GPS car dock is going to have GPS and will work with the ipod touch when it's released next month.
There was a report a month ago that most flickr updates were from iphones. only reason for no camera on the Touch was cost