The resolution on the iPod is pretty low, but damn is it a quick camera. In contrast, I have a 3.2MP camera on my Android phone (granted it's a lower end Android), but the camera is slow as hell. It's decent for still life, but forget about taking a picture of anything that's in any sort of motion.
For realistic use, the iPod touch camera is still better, despite it's low resolution. I've made 3x5 and 4x6 prints from pics taken on my iPod touch that turned out pretty nice actually.
And of course the video capabilities are awesome. No complaints there. Sound is top notch as well. The iPod smokes my low end Android in this department too (video and sound).