I'm not sure I understand why parents would favour a Touch over a phone. With more-or-less ubiquitous wifi for those that seek it out--especially kids in school, Facebook messenger, iMessage, etc; I fail to see any real world protection for kids whose parents want to keep them in a bubble.
I think you miss a group of potential users who would replace a much more expensive iPhone with a pretty capable Touch, use Ringcredible or Skype or even FaceTime for calls via wifi--or just use a cheap pay as you go phone for voice calls. These folks use Starbucks. Mickey Ds, libraries and other locations as mobile bases with wifi. Some will supplement with a pay as you go 4G mobile router for those times when they must connect and there's no free wifi available.
There are lots more nomadic folks around than you might realise. And this is a great choice for travellers who never intend on buying local sims sa they go from country to country.
No, the Touch is not a solution for the coat and tie USA mobile warrior type. But for many others it is.

As someone who uses an iPod (now the 6g and before that the 5g and 3g ) as my wifi-enabled phone as often as possible, I'm really very pleased that Apple continues to offer a device with so much capability. The 6g is substantially faster than the 5g and is the perfect little device for cutting the cel phone service charge cord. I wish it was GPS enabled but still find it very useful for navigation in cities where wifi is everywhere and the signals still enable mapping services. It's also incredibly light and a great little email/web browsing machine and, especially as of the 6g, a more than adequate pocket camera. Kudos to Apple.

@ John Driggers
you are absolutely right.
All article on the new iPod touch seems to miss everything! Even @ gizmag! Kind of they r wearing blinkers.
The iPod touch will for sure not be that heavy sale that iphone does, but it still has it place for a long time to go.

John, are you suggesting we have to use smartphone monitoring like http://2simdesign.com/ or mobilewatchdog? No, really what is the solution? leave them unattended?

What I wonder is since they decided to further develop the 4 inch platform, that we might see a new 4 inch iPhone in the near future.

I still use an iPod touch 4, with similar usage as above.
Long time waiting.
I never use earbuds or listen to music on the go, it's my excellent micro computer.
I will be getting this new one shortly.
I wish it had the latest iPhone camera, I would have paid more for that.

I just received my iPod 6 Touch yesterday and after using my iPod 4 for over 3 years this is a huge upgrade. Perfect for music at the Gym. Plus you get 3 months free music service from Apple. So you can use Siri to pull up what ever music you want to hear. It has great sound, I would say a small improvement over the older model. Very fast and videos look sharp and clear. If you order from Apple you get free monogram on the back. The WiFi is a big upgrade and Bluetooth works perfect. Has the same great camera of the iPhone 5. For $199 you can't beat it for music lovers. The size is small and very thin and light. Great for those that want to take photos and leave there phone in the car. I got the Gold model and has a very nice look. This is a big jump forward for those that still want a music player that has all the bells and whistles.

@John Diggers "I fail to see any real world protection for kids whose parents want to keep them in a bubble."
I'm a parent of a 12-year old. The issue is not one of keeping my kid in a bubble. It's a matter of cost. I'm not going to buy a 12-year old a $650 phone. Nor am I going to pay for $50 to $80 month for a phone plan when my 12-year old doesn't need to call or text anyone outside of the house. (In an emergency, she can use a friend's phone.)
If, as you say, wi-fi is everywhere, then it makes even more sense to get my kid an iPod Touch since she can use wi-fi to make calls, text, etc.

I have a different reason for buying this new upgraded Ipod touch, although I'm probably one in a million. For the past three years I've been extremely happy with my Iphone 4S, but recently, it has started to show its age with IOS 8. It's getting slower. Also, I live in Quebec and the cell plans are extremely expensive here, I pay over $70/month and only get 1 Gb of data. All carriers are priced about equally here. I use the "phone" function sparingly, for emergencies only. 99% of my Iphone I use as a micro computer, so I'd be happier with more performance Why don't I sign on for another two years and get a recent Iphone model you ask? I don't have that kind of cash anymore. A two year contract with a Iphone 6 will cost me more than $70/month plus I have to pay over $200.00 for the phone. That's nearly $1900 for two years. Personally I will keep my Iphone 4S and use it strictly as a phone, go prepaid with it ($100 card is good for one year at 0.40/minute), and use the Ipod touch as my new micro computer. So, that's $300 for the Ipod touch (I bought the 32Gb model) and $200 for two years of prepaid. A total of $500 vs the $1900 previously mentionned. I don't mind the fact that the Ipod touch is wifi only, I rarely need to be connected outside my home. Like I said, one in a million surely.

Tech writers have long carried high-end smart phones around with them, so it's unsurprising they are unable to fathom why anyone besides a child would have need of an iPod Touch. I get that. But let this non-child stand up and be counted as someone who feels it's perfect for him. I'm a self-employed home business owner. I do nearly all my phone calling from my desk. When I'm away from the desk, my TracFone more than meets my needs, for a tenth of what a lot of other people are paying for their cellular service. Pretty much everywhere I go, there's Wi-Fi, so I have no particular need or desire to pay for a costly data service. When I'm out and about, I love to take pictures, but hate lugging a camera. My iPod Touch 5th gen is so think I don't even notice I'm carrying it...and it took great shots. I can't wait to see how much better I can do with the 6! When I'm in the garden, I often want answers to questions about plants and their care. "Hey Siri... " When I'm in the car, or out walking or fishing, I like having the ability to listen to music and podcasts. I like being able to check and answer my e-mails and messages. I have my own home-brew "cloud" set up on a big hard drive in the house, and can use FileBrowser to watch movies and TV shows I've recorded, even while sitting in the gazebo outside. Games, nope. But I'm sure game players will have fun with it too. Long story short. I get great use from mine, and it serves as the perfect accompanyment to my nicely-unsmart "just use it to take calls" flip-phone. I hope Apple continues to support and update the iPod Touch for many years to come, and as they do, I'll be lined up to get the latest one.