Why not ask them why the want the iPod Touch? If it's just for music and the occasional app, an Android phone would do. If it's for apps as well, perhaps probe as to what apps and see if they are available on Android? I know there's still some apps on iOS that aren't on Android (Sonic Jump for example, grrr).
Find out the reasons why, let them know if an Android (your) phone could do the same, see if they're interested? To be honest, if I asked for an iPod Touch and I got an Android phone, as much as I love Android, I would be disappointed.