Your comparison of the iPod touch and iPhone are really two different things that shouldn’t be compared, the iPod touch only offers a few storage options, compared to the iPhone, has much larger storage options. Also, consider the demographic for the iPod touch, likely a teenager, do they really need 128 GB of storage for a base price? (Which would also likely put the iPod out of reach for a starting price as well). Keep in mind, the iPod Touch is a basic media device, not a device someone’s taking 4K video or playing intensive games on that they might with one of the latest iPhone models.