Ipod touch or Iphone? Help?

Hiyall,

I need to get a new MP3-player (my old Ipod was stolen), and I’m thinking of getting either an Ipod touch or Iphone. The reason I want to stick to Apple is because I like the iTunes concept and is used to the interface.
I don’t talk that much on the phone, but I’d like to surf and check my email often etc. I also need a new camera, so I’m thinking maybe an Iphone?
However I still find Iphone a little bit too expensive (being a student)...

Can someone help? Pros and cons of Ipod touch vs. Iphone? And if Iphone, should I get 3gs or 4gs?

Perhaps I should add I live in Scandinavia so the Iphone might be a little more expensive here than in the US for example