When Apple reshuffled the iPod lineup, the iPod touch became something else. It's not the expensive, fancy iPod. Or the cheap, gimped iPhone anymore. It's the iPod.
The second iteration of the iPod touch equals or improves upon its predecessor in almost every physical facet. Slimmer, lighter and more functional, the v.2 also gets new volume control buttons, full Nike+ integration and a built-in loudspeaker. It's not a radical change, but it's better.