If you’ve got $400 to spend on an Apple product this season, you may face a tough choice: an 8GB iPhone (after the recent price drop), or a 16 GB iPod Touch, a near-replica of the iPhone that works in the same way but has fewer features.

See how the iPod touch compares to the iPhone in my iPod touch vs. iPhone feature comparison:

iPod touch features

Every feature on iPod touch has already been seen on the iPhone — expect for the iTunes WiFi music store, which will debut on iPhone sometime this month (read more about it below). Not every iPhone feature is on iPod touch, however.

Some of the useful applications on iPod touch include:

Safari: Just like the iPhone, iPod touch will let you surf the web over a WiFi Internet connection. You’re out of luck if there are no networks nearby, though, since iPod touch lacks iPhone’s EDGE network.

YouTube: Also like the iPhone, iPod touch will feature a YouTube application for watching videos on the run. From the looks of it, you won’t be able to comment on videos, a feature also lacking on the iPhone

Music & Video: The iPod touch will play and sort through your music and videos in the same way as iPhone does. But instead of music and video being subdivisions of the “iPod”, like with the iPhone, the Music and Video applications will each have icons on the home screen.

Contacts: As with the iPhone, iPod touch lets you sync your contacts, only you won’t be able to dial them. Instead of listing contacts as a subdivision of the phone (like on iPhone), iPod touch displays a Contacts icon on the home screen. iPhone should feature this Contacts shortcut as well, in my opinion.

Photos: The iPod touch photo album works just like iPhone’s. You can flick through photos with your finger and zoom in by “pinching” the screen. The only difference is that iPod touch won’t have a camera, so there will be no Camera Roll in the Photos app, like in iPhone.

iPod touch will also have iPhone’s Calendar, Clock and Calculator applications.

7 iPhone features iPod touch lacks

All of the following applications are on the iPhone, but lacking on the iPod touch:

1. Phone (including SMS)
2. Camera
3. Stocks
4. Maps
5. Weather
6. Notes
7. Mail

What’s new on iPod touch?

I’m particularly excited about one new feature addition to both the iPhone and iPod touch:

iTunes WiFi Music Store

With the iPod touch, Apple introduced what will essentially be a mobile version of iTunes. With the iTunes WiFi music store, you’ll be able to sort through, preview and buy music, videos and audiobooks on your iPod.