Well, you're missing out tubemonkey because you have already closed your mind. I'm not familiar with that other mp3 player, but I've never seen an mp3 player that comes close to being as good as Apples'. As a pocket computer, it would be a bit of a disappointment, since it can't really run heavy-hitting software.
The only pictures above that I could see any grain on without putting my face up to the screen was that of the Porsche, which was taken in low light. (= higher sentivity = more noise, which is to be expected) As much as I try to have a proper camera on me, there are just too many opportunities that pass by because I don't have one in my pocket. For those, the 2 MP camera/lens/sensor built into my phone is not of the same quality as that of the Touch.
You should really give it a
serious try. Unless you just are trying not to spend the money and don't want to get hooked.
In that case, you're right, this is abolutely a joke.