WHATS THE DIFFERENCE BETWEEN THE IPHONE AND THE IPOD TOUCH?

Im usually asking this since my crony got an ipod hold and right away he has an focus for it which lats you make use of it as a phone(call/texting). and im flattering certain you can put song on your iphone. So, right away whats the disproportion for shopping one of them and not the other? can name applications they have and use they get.
What stores have it for the cheapest price?