I was in the same position - here's what I thought:

GPS support - iPod touch has no bluetooth, and no USB host. Makes it a little tricky.
OS - once the API comes out for the iPod touch, it will be very cool, and there's the jailbreak. N800 has Linux.
CPU speed - hmmm. The N800 is slower, but the OS doesn't have all the very cool GUI effects. OS2008's de-underclock to 400MHZ is definitely a good thing!
Web browsing capability - The Touch has Safari. There's a webkit-based browser in planning for the N800, and for now we have Opera and microb. Hmm, I'd probably rather have the 800x480 screen, though browsing the web on the touch works quite well.
Cost - n800 is cheaper (here at least) although given the price of adding two SD cards for 16GB worth, that might even up...
Media playback - iPod Touch syncs with iTunes (while some of you may see this as a downside - on OS X, iTunes is much nicer than it is on Windows ), n800 is drag and drop.
Size - clear winner for the Touch! Given what it packs - it's truly tiny!
Expandability - n800 has USB host and 2xSD slots. iPod touch has... a dock connector with a serial line that could be hacked.
Wireless - n800 runs Kismet, and might be capable of an external USB wifi card. iPod touch has internal wifi, but I guess since I don't have one, there won't be a KisMac port for the time being.

I thought the n800 would be good. I'm coming from a Palm TX, so I'm not that hard to impress (The Garnet VM was a surprise...)

End result: They are very different devices. Put them next to each other and you'll see this.