If you have recently been debating whether or not to buy an iPod Touch or an iPhone and have decided to go for the Touch, you can now give yourself a pat on the back for making the right decision. This is because a new application has just been released which magically transforms the iPod Touch into a fully-functional phone without the hassle of an expensive contract to go with it.

Admittedly it is not quite magic which lies behind the innovation. However, it certainly seems like magic for the thousands of iPod Touch owners who are now preparing to download the new application, which was released last week by Truphone.

The idea is that you download the application directly to your iPod. It will then make use of its WiFi connection capabilities to make calls across the Internet in much the same way as would be done using VoIP services such as Skype.

Clearly, this is not going to be as easy to use as a standard phone, but with WiFi hotspots springing up all over the place, it is becoming much easier to get connected wherever you are in the country.

The application is completely free to download and calls to other users and Google Talk users are free of charge. The company has also said that in a matter of “weeks, not months”, users will be able to call landlines for about 3p per minute.

So, if you have WiFi access and are thinking about getting an iPhone, it may just be worth holding on a little bit longer before signing up to that extremely expensive contract.