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I have both a sony 505 and an iTouch. I would rip the arms off of whoever tried to take either one from me. The iTouch does sooooooooooooooooo many things. I use it for most of my computer needs, only turning on the desktop occasionally. My 505 is perfect for when I want something that looks like paper. I like them both - and if I had to chose only one of them, I would probably pick the iTouch, due to the sheer number of things I can do with it, but I would mourn the loss of my 505.
It really ultimately depends on your reading style - what position do you read in, what font size is your preference, etc...
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