Why are iPhone's so much more expensive than iPod Touches?

here in new zealand base iphone 4s goes $1050, while base ipod touch goes $260. why price gap much? main difference seems iphone has 3g, allowing phone. warrant $790 price difference?

 

they have cellular radios, higher quality screen, bigger battery, more overall mass, pane of glass, compass, better camera, earpiece, proximity sensor, mute switch, microphone, better speaker.

 

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