Apple used to keep the last-gen iPod touch around as the cheaper alternative. However it has replaced that with a four-inch iPod touch, which means it’s more like the fifth-gen model. The only difference, however, is that it has no iSight camera, and the loop is gone.
That may or may not be an issue to some folks. However, that does mean it costs $229 as opposed to $299. That’s quite a difference in price. The other limitation is that it’s only available in Black/silver. The other models come in various colors. Honestly, it’s probably the color I’d get if I were going for an iPod touch anyway. However, missing a camera is a bit of a bummer. That said, iPod cameras usually lag behind the one on the iPhone, which is either to keep costs down or to push potential buyers toward an iPhone instead.
The Loop isn’t that big of a deal, but some people may want it. It’s just a small button on the corner of the iPod touch that pops out and lets users attach a strap to their device to keep it more secure.