iPod Touch looks good for using a few apps which are iOS only, and the iPod Touch 4th Generation seems like the cheapest option for using iOS apps on a portable iOS device without signing a contract for the iPhone.
Is the iPod Touch 5th Generation worth the higher price at $299, or should I get an iPod Touch 4th Generation for $199 or less?
I have both and while both are great for what I use/used them for (just listening to music and messing around on), I would pick the 5th Gen. It is noticeably faster, bigger screen and looks pretty cool. It is more expensive but it is better and will be supported longer aswell.