+1  A: 

Ipod touch is missing some features of the iphone.

  • You don't have the phone,
  • You only have wifi network (no 3G network)
  • No Camera
  • No GPS
  • and some other matters (like accelerometer and compass)

You can start with ipod touch, and unless your app is using any of the above then you should be ok. But make sure you plan your app and see if it will require any features that might not be on the ipod touch

we are using ipod touch but also testing on iphone (mostly for no-wifi scenarios)

Nir Levy
Note that even though the Touch has no GPS, you can use CoreLocation - it uses WiFi triangulation. Also, you can use the image picker with the photo library to simulate taking images, and the Touch DOES have an accelerometer (but no compass)
Kendall Helmstetter Gelner
@Kendall thank you for the clarification about the accelerometer
Nir Levy