Have to agree with ilovejedd, the iphone sucks as a phone but when combined with everything else it does it more than makes up for its shortfalls in my opinion.
I must admit though I prefer to read on my itouch than on my iphone (I bought the touch a long time before the iphone came out in case anybody wonders why I have both), the iphone just isn't fast enough in the page turning category because of all the extra stuff it's doing while stanza is running. The itouch is much much nippier, page turns are instant rather than taking a noticable and distracting amount of time on the iphone.
If you don't want a phone or as ilovejedd mentioned you have easy access to wi-fi hotspots (or you simply load up with loads of books before you leave the house!!) then I would definitely recommend an ipod touch either G1 or G2 whichever you can get cheaper so I'd say you definitely made the right choice