Want an affordable iPhone? Get an iPod Touch.

As you can guess from the title, Tim’s iPod Touch finally arrived. After months of waiting, we finally had enough rewards points saved up to buy the gadget for $0. That’s my favorite price of all!

It’s already come in handy several times. We’ve mapped out destinations at home, then gotten directions we can take with us. Tim has used it to make shopping lists. And he’s slowly integrating his phone’s calendar into the iPod’s schedule.

The end goal is to get Tim more organized by having all his data and schedules stored in one place. This way, if he has a thought, he can type himself a brief note and check it later.

I am also searching for a good expense-tracking app. Preferably free, but if none are available, I’d be willing to pay a couple of bucks. (Suggestions?) My hope is that he’ll become more aware of spending if he has to log the expense immediately.

The point is, this little gadget has almost all the functionality of an iPhone. There are exactly two ways it doesn’t measure up to the iPhone: actual calling capability and Internet access.

The first is as a phone. Since so many people are dependent on their cell phones, they may argue that they’re already going to pay for a phone anyway. Why not combine the two?

The most obvious answer is the one CNET UK provided: iPhones suck. At least, they suck as phones.  They’re fabulous in all other regards; they’re just not good at their main function.

You can blame Apple or AT&T. (Most people choose the latter.) But the fact remains: Users complain about call quality and dropped calls. A lot. And things won’t be getting better in the near future, since Apple extended its exclusive contract with AT&T.

It seems smarter to get a phone with good call quality/retention. Then, for your app-addiction, you can turn to your iPod Touch. It has all the same capabilities — and without constant Internet access, you might end up with fewer impulse buys in the app store.

Of course, that last bit brings us to the second way iPhone is considered superior to an iPod Touch. An iTouch can only be online when it is within range of a Wi-Fi signal — one that you have access to, I might add.

The iPhone, on the other hand, lets you be online 24/7. But that connectivity comes at a price: $30 a month to be exact.

Now, for some users, the cost is absolutely worth it. I know I have one reader who has to use her cell phone’s Internet access in order to get online at home. She can’t get DSL or cable modem where she lives.

For most of us, though, the Internet connection doesn’t have to be on 24/7. And that’s where Wi-Fi hotspots come in. There is an ever-growing number of places offering you free wireless Internet. If you’re in or near a library, you’re on. Tully’s and Starbucks both provide you with access. (For Starbucks, you need to purchase one thing a month.) My guess is that, if you took time to check out your area/daily route, you’d find a surprising number of places to get online.

Is it as convenient as a phone that is always connected? No.

But isn’t a little inconvenience worth saving over $300 a year?

I don’t know whether you’ve done the math, but people with iPhones spend $360 a year on their data plans. That’s $720 during a two-year contract, just for the privilege of Internet connectivity. And that number doesn’t include the $99 to get the iPhone in the first place. All told, you spend $819 in a two-year period, plus applicable taxes.

Comparatively, an iPod Touch costs $195. (If you get it on Amazon, it’s $184, and you don’t pay sales tax.) By the fourth month, you’re officially saving money. And over a two year period, you’ve still only spent that original $195 (or $184). That’s a savings of at least $624 — more if you use a cash-back program to buy it.

Again, for some people, the cost is worth it. But for the rest of you… How often do you actually use your cell’s Internet on the go? When you’re not close to a Wi-Fi spot? And how many of those were really necessary, as opposed to just being bored and dinking around on the bus to work?

Obviously, my bias is clear. Tim has wanted an iPhone for ages, but I vetoed it as too costly. With the iPod, he gets all the functions he wants he (including GPS) without the recurring monthly fee.

What do you think of the iPhone? Would you switch to an iPod to save that much money? Or is the data plan worth it to you?

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