you can use all of the apps on your ipod touch. I'm not sure what you mean by "poor performing product" as the ipod touch has sold millions and is very popular. Just think of it as an iphone without the phone part, and the rest is almost identical and the ipod is certainly the equal or better than the iphone in terms of specs of processor, etc. Plus, the ipod touch comes in bigger sizes.
check macrumors.com for complete information, buying guids, etc. It is THE mac/ipod/iphone website.
As far as the processor, from the website TUAW:
"The newly introduced third-generation iPod touch contains a S5L8922X
series processor, which is a slight numerical increment over the
processor in the iPhone 3GS. Also, as revealed in the teardown by iFixit, the model number etched on the processor in the new iPod touch, 339S0075 ARM, also shows a slight numerical increment of the 3GS processor, which is 339S0073 ARM."