I have an iPod touch, as well as an iPhone, for a couple of reasons:
I do a lot of book reading and music listening, and listening to audiobooks, and I don't want to worry about running down my phone battery while on the go. (So my touch serves as a back-up battery of sorts, lol.)
I also feel more comfortable reading on my touch on public transit, because I keep all my contacts, email and other private data off of it. So if my touch were stolen or grabbed, I would be at less risk of data theft.
It's not a big deal if they discontinue the touch, though, because I could use an old iPhone for the same purposes. I bought a touch 4 at the time because the screen is much better than on my old iPhone 3G, which I could've used as my "backup battery and theft protection" device.