The iPodTouch is a mass-marketed device, so its cost has been driven down. An 8Gb device costs only $230.
Its development environment nearly demands performance. Its development language is Objective-C or C and only one app can be run at a time. Contrast that with Sugar on X11 on Python on C and an environment that exhausts available memory with very little effort.
Its touch screen encourages interaction. The XOs flakey keyboard and touchpad discourage it.
I still love the XO and OLPC’s mission. The only thing that they seem to have accomplished, though, is the proliferation of Netbooks across the commercial landscape.
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I agree and disagree – the CrunchPad (when available) is what the OLPC XO should have been.
I love the OLPC. What it has over the iPodTouch is ruggedness, mesh network, and a keyboard.
That said, I plan on developing all my future kids’ apps on iPod and Android, etc.
I love the XO, too. They got the hardware right and the software wrong.