I bought my wife an iTouch a few years ago. In spite of several attempts to get existing MP3 files (made from albums we own) onto it, I was never able to do so. The interface must be just TOO intuitive I guess. :-| The only way she managed to get it to play songs was by buying songs on iTunes, songs we'd already bought on CDs! After about a year, it stopped working altogether so she now uses a much cheaper, higher capacity (Samsung) MP3 player that simply looks like a hard drive if you plug it into a PC. It was 3 years old when she started using the Samsung and now it's 6 years old and still going strong. That's about it for me and Apple.

@warren52nz. That's strange because the iPod touch has been capable of playing mp3's since at least the 2nd gen. I have a 2G and never had a problem with mp3's. It may have had to do with setting iTunes to manually manage your music as opposed to letting iTunes do it automatically...but I could be wrong. Mp3's no problem however.

@warren52nz you probably tried to drag and drop .mp3 files into the itouch device. you have to import the .mp3 files into itunes then sync it. I have over 800 songs I didn't purchase from iTunes on my ipod touch, no problems. don't blame apple, blame yourself.

The PDA is dead! Long live the iPDA!
The Personal Digital Assistant never "died", Apple just changed its name.

Will, thank you for taking the time to compare these two devices. I searched for any details about the connector on the bottom. You didn't say anything about it. The iPhone 5 has the new "lightning" connector. Does the iPod5 have the old or new lightning connector? Thanks!
Ed. - James, the 5th-gen iPod touch (and 7th-gen iPod nano) does indeed sport the new Lightning connector. See here for more details: http://www.gizmag.com/ipod-touch-nano-update/24119/

I use my 4G as a professional quality multi-track recorder with the awesome GuitarJack audio interface and MultiTrack DAW app. That's rules out on the 5G. Big advance. I'm sure that the only reason the 4G lives on is the venerable dock connector which too many of us depend on.
The new connector is too small to ever allow attached devices like the GuitarJack without an intervening cable. Fail. Most existing docks won't properly hold the new device even with a Fool Adapter which, it is reported, requires the attached device to have a license.
Site foot, shoot.

Very thorough and helpful comparison. Thanks so much! But there are two additional costs to keep in mind if upgrading to 5G: a new $20-$30 case to accommodate the new dimensions, plus the $30 cable needed to attach the new Lightening connector to an existing dock (or else spring for a new dock as well). So the after tax difference in price is roughly $175, not $100 (plus the cost of a new dock if you get one).

I bought iPod touch 4G as cost here in Australia for iPod Touch 5G is $329 inc GST for 32 GB (can be had from nearby electronics store for slightly less). Although, there are lot of improvements but to be honest, it is quite close to Android 7" Tablets pricing & of course iPad Mini & although they are not quite portable as iPod touch but there is a feeling that one has wasted money on iPod touch when for the similar price you could have something bigger & better & buy a iPod Shuffle or nano instead. (I am assuming that most people have limited funds & are resourceful about their money). I got iPod Touch 4G (16GB) for $185 (inc GST) from The Good Guys which I felt was real value for money.
Secondly, in person I still found iPod 4G more classy (we just have choice of Black or White with Steel back but it looks awesome) whereas the new ones I felt were bit jarring (Blue looked OK, Gray & Silver were OK too but I felt they were not as good looking as the older model). Just my personal opinion though.
Thirdly, if one already has iPhone 5 or iPad 3 or 4 (or saving moolah for them), why spend on iPod Touch 5G when you can still get a decent experience out of iPod Touch 4G. Older chip be damned, it is music player first & foremost, all other niceties are just extra bonuses. & A4 is sufficiently powered for that. For bigger & better games, I would rather play them on tablet. The only real advantage that I found was bigger screen size in the new Gen. But to be honest after being spoiled by big glorious screens of Android phones, I find 4" screen size puny anyway. Bit less screen size of 4th wasn't a deal-breaker for me.

I didn't mention additional cost associated with new lightning connector as I was already discussed above but when you factor in things like more widely available accessories still supporting older connection & are obviously cheaper, then the difference becomes even more glaring. or just spring $30-35 for adapter but still in some cases like DonGately said above, it just won't be the best solution.
So, I saved $144 (Diff in price between 4G & 5G - altough 4G is just 16 GB but for me it is plenty) & saved another $35 on adapter. Total = $179 & it is a lot of money.
Cheers

@Him Rekhi: agreed; DonGately made a good point. When they changed the connector the pin-outs change so all previous devices that use to work, are now 'if they work'. This same deal happened when I switched from iPod classic to the iTouch, lost all my devices; no FM, no analog audio out thru dock, etc. That kind of thing is what tic's me off. I would still say (an validate this as being an audio engineer); the iPod may be the only Apple product I own but 9 out of 10 audio engineers own iPods (guess why).