What is the differences between iTouch and iPhone?

Actually, it is called iPod Touch not iTouch.
According to this web site , the differences between iPod Touch and iPhone are:

There is no email client on the iPod TouchThere is no Maps application on the iPod TouchThere are no Stocks or Weather widgets on the iPod TouchThere is no built-in camera for the iPod TouchThere are no Blutooth capabilities for the iPod TouchThe iPod Touch has a differently styled “Dock,” with a reflective surface — akin to the Dock that will debut with Mac OS X 10.5 (Leopard)While the iPod Touch is sleeping, the user can tap the home button twice to bring up touch controls on the screen — a feature the iPhone currently lacksThe iPod Touch has a separate Contacts app — it’s built into the Phone application on the iPhoneThe iPod Touch has separate Video and Music apps, whereas the iPhone has a single “iPod” app that contains these functionsThere is apparently (and obviously) no microphone on the iPod Touch, though it will be interesting to see if such audio-in capabilities could be enabled via a third-party device.The iPod touch’s headphone jack is on the bottom of the deviceThe iPod touch lacks a built-in external speakerThe iPod touch’s screen appears to be of a slightly higher quality than the iPhone, with 163 pixels per inch to the iPhone’s 160 pixels per inch.

簡單來講ipod touch 係iphone的冇電話功能版.
主要係睇相,戲,聽歌等, entertainment的, harddisk size會大過iphone少少~