Sure, you can buy a ZTE Peel and transform that iPod Touch into a pseudo-iPhone, but why even spend more money on a plastic shell? With a little ingenuity, you can turn that packaging your iPod Touch came in, into an iPhone.
Making your own iPod Touch iPhone doesn't look too hard. Just need to cut some grooves in the plastic packaging, wrap the device's white earbuds tightly around said grooves, insert a couple of rubber grommets and load up your favorite VoIP service.
Head over to Lifehacker for the full step-by-step on how to convert your iPod Touch into an iPhone. I can't say the results are as slick as an iPhone 4 (anyone else seeing Cookie Monster in the picture above?), but at least it works.
Please remember that VoIP on the iPod Touch only works over Wi-Fi. So either you're using this at home or you've got a MiFi on you.