I'd have to say the picture quality is really nice for a non camera... With geotagging apps and such thin form factor, it can be a very nice sidearm to a dslr.
still photos (960 x 720) with back camera
For iPod touch with Maps, the Maps application provides your approximate location using information based on your proximity to known Wi-Fi networks (when on and available). The more accurate the available information, the smaller the circle identifying your position on the map. The feature is not available in all areas. Known Wi-Fi networks are predominantly in urban areas.