Come with us as we travel back exactly one year into the past (we won't be here long; humour us). Nobody outside Apple and AT&T knows about the iPhone, and mock-ups of the fabled 'widescreen iPod' have been circulating on the web for months.

People have been murmuring too about a touchscreen iPod, and saying that a wireless iPod - with a direct link to the iTunes Store - would be kinda neat. Now imagine if Apple had released the iPod touch into this context.

The crowd would have gone wild, Steve Jobs would have been (re-)hailed as some sort of demi-god, and Mr Visa would have woken up to see an appreciable spike in his graph of worldwide spending.

Back to the present

Fast-forward to now, though, and the new iPod touch - for all its shiny, lovely deliciousness - is decidedly less astonishing.

The problem, you see, is the iPhone. Announced in January and shipping in the UK in November, it introduced all the features of the iPod touch and more.

Let's get this straight: the iPod touch requires you to slap down £199 (8GB) or £269 (16GB), but then that's it. The iPhone - itself 8GB - although it's only £70 more than the 8GB iPod touch, requires you to sign up for an 18-month contract that will add a minimum £630 to the total cost of ownership. So by that maths, the iPhone is not £70 more than the iPod touch, but at least £700 more expensive.

And yet the iPod touch isn't so much 'the best iPod there is', it's more an iPhone with some of the functionality ripped out. Spiritually, it is more iPhone than iPod - at least as far as the rest of the iPod line-up goes - and as such it makes reviewing it a tricky proposition.

If you review it as 'iPhone Lite', it's a poor thing indeed. Although it boasts Wi-Fi and - since you need some sort of interface to the web if you want to join public hotspots, enter passwords, etc. - Safari, you don't get Mail. Sure, you can access many mailboxes via webmail, but that's an ungainly solution.

You also miss out on Maps, Weather, Stocks, a camera, a dock, an external speaker, Bluetooth, Notes and - of course, we only include it here for completeness - any kind of cellular connectivity. Some of these omissions we can understand, but there's another that just seems plain mean, and does seem like Apple is deliberately trying to create an artificial segmentation between the iPod touch and the iPhone.

Although it's possible to edit Address Book entries synced to your touch, you can't edit or create calendar events as you can on an iPhone; we sincerely hope Apple decides to remedy this with a firmware update.

If we review it as an iPod, though, things look a little bit better. Certainly, the 3.5-inch screen is by far the best option for watching videos, and although, like all the iPods, the screen lacks punch and richness, especially in the blacks, it generally performs well.

It seems that reports of shimmering in dark areas only affected some early models; Apple has acknowledged the issue. Note that it's a different screen from the iPhone's, and markedly less accomplished.

And if you've never used an iPhone before, the multi-touch interface will come as a wonderful surprise. It provides a genuinely revolutionary interface to your music, enabling you to flick through album art via Cover Flow or ping through a list of artists, albums or other criteria with a fluidity that almost makes the interface seem alive.

The touch inherits the iPhone's accelerometer, too, switching the display to landscape when you rotate it 90 degrees. Photos can also be pinched and scaled, as on the iPhone.

Music syncs to the touch via iTunes, as with any other iPod, but with its relatively limited capacities - 8GB and 16GB - many of us will have to make decisions about what media to copy to it. This - ironically, given the touch's strength as a video playback device - is particularly relevant when syncing space-hungry video files.

There's some background hiss in the audio, although this is mostly noticeable with better headphones than ship with the device.

Wi-Fi mania

The only really new thing that the iPod touch adds to the iPod lineage is Wi-Fi.

As far as we can tell, the thought process at Apple went like this: "We really want to add the iTunes Wi-Fi Music Store to the touch so that you can buy tracks directly from the iPod. More money for us, mwa-ha-ha-ha-ha, etc. In order to do that, we need to add internet connectivity, and the best way to do that is by adding Wi-Fi. And because we're adding Wi-Fi, we also need to add some sort of browser so that people can connect at public hotspots."

The inclusion of Safari, then, seems to be almost a happy accident, and its implementation on the touch - as on the iPhone - makes it by far the best mobile internet experience ever devised.

The ability to see a full web page - not something reformatted for the small screen - and double-tap or un-pinch to zoom in is game-changing, and means that if you want a media-playing internet tablet, you can forget about Nokia's N800. You also get the YouTube client, so you can connect to the video sharing site and watch American college students quite literally piss away their education.

Playing times

Battery life is reasonable - quoted at 22 hours for audio and five hours for video, roughly borne out by testing - but this does drop markedly if you interact with the device a lot or make use of Wi-Fi. Remember too that you'll officially have to pay Apple if you need to replace the battery; UK pricing for this wasn't available for this service as we went to press.

Ultimately, the iPod touch is an impressive slice of technology by anyone's standards, but the sense of anticlimax remains. 8GB and 16GB capacities are small, and while the decision to go for flash memory means better power performance, we'd rather have seen a thicker touch - this one's just 8mm thick - adding a hard disk and a little more space for the battery.

And while the total cost of ownership for the iPhone is considerably higher than with the iPod touch, the initial purchase price is low; for the extra £70, you'd add the camera, Mail, Maps, proper iCal manipulation and all the other bits.

We expect Apple to shift many thousands of iPod touches in countries that don't have the iPhone, but here in the UK the decision is a tougher one. And anyway, if you need more space, the classic is the obvious choice.