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It's perfect for anybody who wants to run apps, games, read books, listen to music, etc. but who doesn't want or need an iPhone. The more expensive version comes with 64GB of storage, which a lot of people might not need. I think the pricing is fair, given how many things it can do, the new screen, etc.
I ordered two for my mom and her husband. They have phones already, so they don't need iPhones. So the iPod Touch will work great for them.