What's best for us? (iPod or iPhone)

Hi everyone, first of all, I'm a complete newb when it comes to idevices - I'm in my late 20's and never owned a smart phone. This is mainly due to a tight budget and not wanting to pay for the data plans.

My dilemma is that I'm very interested in Facetime. My co-worker showed it to me on her iPhone 4S one day and said it's much better than lugging your laptop everywhere for Skyping. My husband is out of state right now due to work, so we Skype everyday.

Now, we don't know which to get; either the 4th gen iPod Touch or the iPhone 4s (new or used). I would also be using it for music, taking pictures (I read that the camera quality in the Touch was horrible though), and Facebook. Even if we get the iPhones we wont be using it as a phone (co-worker said it'll work fine with a blank sim card). I was also warned about getting a used one from Craigslist because a lot of them were jailbroken and most likely have problems. If we get a used ones, relatively how safe would it be to use and keep personal info safe since they were hacked?

Ideally we'd like to only spend a max of around $500 total for 2 idevices. If we get new iPhones, my sister said she'd renew her sons contracts and get us them for $200 each but we'd have to wait til July (but by then the next new iPhone/iPods could be out or something).

Thanks!

If you restore a jailbroken iPhone (in iTunes) it will be wiped clean of all Jailbrokenness. Now they could mess up the sim card, I think (but am not sure), but if you are taking that out then it's not an issue. Take the sim card out, restore the iPhone in iTunes, and you are good. I don't know if you need to have a real sim card in there or not though. You might need one. Note that you can use a pay-as-you go sim card. We have an AT&T pay as you go card in my wife's iPhone 3GS and it works fine. No data service, but you do still have WiFi, and it works great as a pay as you go phone. Only thing to note there is that the 4S (and 4) use a micro-sim card, so you need either a micro-sim pay as you go card, or you can supposedly cut a full size sim card down to micro-sim size. I've never tried it, though I've seen that there are tools you can buy that will cut the card for you. the 3GS uses a full size sim card so we didn't have that issue.

The camera on the iPod touch is pretty bad. The iPhone 4 (that's what I have) has a good for a cell phone camera, but it's still a cell phone camera. It only takes decent pictures in good light - which means outdoors. Indoors it's not so hot. Very grainy. And while it has a flash, the flash doesn't give very good results, and often is worse than turning the flash off. It does take quite good HD video when the light is good.