I have an iPod Nano because the tiny form-factor makes up for it not holding all my music. I also have an iPod Classic for those times I want to have all my music with me, form-factor be damned. The Touch combines the worst of those worlds, and hopes to make up for it by adding cool new Internetty features.
The problem is, public WiFi in Sydney is rare as hens' teeth, and when you do find it you have to give your credit-card number to yet another dodgy provider who will then proceed to charge you several trillion dollars a byte. As such, the iPod Touch would likely be able to get online only at places I'd probably have my laptop out anyway.
(Actually, since I bought a 3G modem, my laptop will be able to get online from far more places than the iPod.)
If I wait a year, the iPhone will be out in Australia. Hopefully by then they'll also have bumped up the flash capacity and added 3G connectivity.
If I keep repeating this to myself, I may just be able to resist the urge to buy one.