Yeah, I'm not sure why people get bent outta shape at the "big iPod Touch" reference. I have one, it is that at one level. I have found it be a superior user experience to the Touch in many ways, and infererior in others (like as an iPod for example).
They are two different products but the fact that they share similar roles in no way detracts from the value proposition of either device.
I think that those who bristle at the comparison are likely too wrapped up in the prestige angle. Which is silly when you place value on that. I heard some of this same argument when the iPhone 3GS was released, that it was the same shape/size of the older 3G and therefore didn't give owners an obvious distinction that they were carrying the " newest and best" piece of kit. But there are those who buy Apple purely for the brand image, much like paying $5 for a coffee from Starbucks.