I've read most of this thread and to be honest can see both sides of the argument - I'm a Macbook and N800/N770 owner - but from what I've been seeing I think Nokia have a bigger problem on their minds than the iPod Touch.

Over the last year the number of Nokia phones I see out and about has dropped dramatically and most people now seem to be using Sony Ericsson. I switched to the K800i, having been very dissatisfied with an N70 and moved to samsung. The rest of my family had moved long before me.

For me S60 killed the attraction of Nokia phones. The N70 was a truly atrocious phone, the N73 marginally better and the N95 is about the first S60 I've seen that has acceptable performance.

The Touch vs N800 argument is just a minor part of the problem.