If you go for iPod Touch, you would miss out on one of the best features of the iPhone - Mobile Browsing. I know you could always use WiFi, but being connected all the time is a complete different story. Also, both iPhone and iPod Touch 2g have the same processor (628 MHz), but the one in iPhone is underclocked to 412 MHz while in iPod Touch it is not underclocked so much. So yes, iPod Touch 2g currenty is faster than iPhone.
My suggestion would be to check out some iPhones in the grey market (someone said new iPhone 3G is available for 24k in Grey) or if you dont mind, go for a cheaper, used first-gen iPhone 8 or 16 GB.