I have seen some advertisements for the iPod touch in the U.S. They focus on the iPod touch's internet connectivity, video playback, and music playback. The ads I see for the iPhone focus on making phone calls and surfing the internet. So the ads you see are tailored for a different target audience. It could be that the iPod touch is selling pretty well in the UK but the iPhone needs to be advertised as it isn't selling as hot.
The iPod touch isn't going anywhere as it is the future of iPods. Apple will more than likely switch to the design of the iPod touch for their full sized models. They just need to wait until capacities hit 32GB and 64GB.