<p>I am thinking about buying an iPod touch to make some money on developing apps for the iPhone. I like the concept of the App Store and had a quick look at it with iTunes.
Looks like applications are categorized, to be iPhone OR iPod applications.
Some apps which are free for the iPod seem to cost for iPhone users.</p>

<p>What is the difference of both platforms, or why is the App Store separating them ?
Does it make sense to develop for the iPhone using an iPod touch (beside phone/location related apps) ?</p>

<p>On developer.apple.com I can sign up for selling my Applications on the AppStore for 99$.
Do I have to expect any further costs ?
Is it a problem to develop from outside the US (in my case Germany) ?</p>

The iPod touch is missing:
GPS
Bluetooth
(iPod Touch 4G has Bluetooth)
Cellular network
Camera
(iPod Touch 4G has front and back cameras)
Microphone (thanks
John Topley
)
(iPod Touch 4G has headset with microphone)
Vibration
The 1G is lacking a speaker
On the plus side it weighs a bit less and is a bit smaller.. Other than that they are pretty much identical (no sarcasm here; it still has the same processor, OS, control system, and display) Personally I would get an iPhone, as you will probably end up getting one later on anyway. I have an iPod touch (bought first) and an iPhone. I never use the iPod anymore.
The iPod touch is obviously cheaper than the iPhone, and there is no contract necessary. However, at least in the UK you can get a contract-free iPhone, and you should be able to do so soon on AT&T in the USA.
There are no extra costs besides the $99 for application development (which is a yearly fee)
We are developing from the UK. One issue to be aware of when you eventually sell your application is tax withholding - Apple will retain 30% of your revenues. There are some forms you need to fill out - I dealt with this in
another thread
. Here's what I wrote there:
You need to fill out a
W-8BEN
and give it to Apple to avoid a 30% tax withholding. This requires that you have a SSN (Social Security Number). If, and only if, you do not have an SSN, you may supply  an ITIN (Individual Taxpayer Identification Number) or an EIN (Employer ID Number).
To get an ITIN, you need to fill out form
W7
and submit that to the IRS.