Yeah! I want 1/10th the space for more money.[/sarcasm] No touch screen is worth 10 times the storage capacity.
You're forgetting the Touch has a far better aesthetic look (with its hardware and interface), far more intuitive interface, wi-fi (Safari, YouTube, and the iTunes Store, Starbucks integration), flash memory instead of a hard drive (lasts longer, far better loading of songs and movies), etc.
I'm not saying that the Touch has incredible value in comparison to the iPod Classic or anything, but you're hardly getting just a touch screen.