The reason iPod Touch upgrades cost is because it is not a "subscription" item; it is a one-time deal item. Therefor, to get past some regulations, it must charge money for the iPod whereas the iPhone can be free. And $10 is nothing, really.
Btw, 8723... If you're a developer, why didn't you know that iPhone 2.0 was
free to iPhone users and costing iPod Touch owners $9.95? Seems fishy... Oh and my Safari 4 Beta is working great. <3
@ Angel: Then why have they outsold so many phones so quickly? 9 months after release and they're 50% of mobile web using, 3 million iPhones sold in the first month, over ten million sold in 9 months, ... That sort of stuff. I don't think it's too little too late. That's more what people are saying for other smartphone makers.
iPhone OS 3.0 looks to be good. I'll be upgrading my iPod Touch for sure. Would have loved to get my hands on a Beta OS. But alas, I can't.

It's added in some much wanted features and some newer ones, too. I don't know any other smartphone that can copy HTML coding, to name one of them.
It'll bring even more to the table. I'm excited to see the new iPhone hardware in July, too. Thinner and faster is my prediction.
~Bcloutier~