I've been using the Touch for a while now and have grown to like it a lot. While it could certainly do with more ram/processing power, it's sufficient for the most part, and the Touch interface that it pastes over Windows Mobile is worth the speed sacrifice (and is great) as far as i'm concerned. However if you've got fat fingers i wouldn't recommend it.
Also i like the availability of software on the Touch (Windows Mobile), and the overall shape of the handset is much more pleasant than the iPhone (in my opinion). Having a call/hang up and directional buttons is also a nice convenience the iPhone doesn't have in its quest for a button-less interface.
Most importantly though, i'm not really sure why you're comparing them; the iPhone isn't competition for the Touch and vice versa. Just because they both use touch screens doesn't make them competitive devices, just like we don't compare desktops and laptops becuase they both use mice.
And lastly "Have had sales plumet to the ground" is complete bollocks