Well, let's be fair: if you buy an iPhone 4 you'll end up paying more in the long run, plus, what sort of games in the realm of standard gaming are truly worth getting on iOS? Some are fantastic, sure! Infinity Blade, Angry Birds, etc etc, but you're not going to get a competent Resident Evil, a competent SFIV (I know of the iOS version; it's serviceable), or a game like Zelda or Kid Icarus.
The best option would be to buy a new iPod Touch 8 gig for twenty bucks cheaper, but at that point you're sacrificing full-featured, well-controlling games for pricing and infrastructure. Depends on what you're looking for in portable gaming, I guess.