Any major difference between iPhone and iPod Touch except telephone function?
What does the iPhone have but the iPod Touch doesn't have and vice versa?
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The differences aside from design, size, glass back cover and weight is that the iPod touch has:
This compares the most upto date iPod Touch (4th gen) with the most upto date iPhone (4S) at time of writing
12-17 were added after Ken suggested more. +1 to Ken for spotting the additional differences.
If I remember reading about this correctly some time ago, the displays, while both having "Retina" resolution, are different models from different OEM sources. The iPhone display is allegedly somewhat brighter with better colors than the one on the iPod touch. I don't have a reference for this, but you can Google it.