... AFAIC Location Services is a joke.
With both devices sitting side by side on my kitchen table, Location Services has NEVER shown the devices to be any where close to each other, and at times Location Services has been as much as a 1/4 of a mile off between the two devices.
Your iPod Touch has no GPS receiver so determining its location relies upon wireless routers whose location is known. Its "location" is actually that of a wireless router. Your iPhone 4 can use GPS, cellular triangulation, and Wi-Fi. One would think GPS would be most accurate but urban areas have a greater density of cells and GPS signals are easily obstructed so cellular triangulation is often more accurate.
Therefore the two devices' locations can be expected to be different. Differences of a quarter mile are easily explained if you understand how location services works: http://support.apple.com/kb/HT1975
Skyhook Wireless (I think Apple uses its own database now): http://www.skyhookwireless.com/howitworks/
Location Services is not a "joke"; its intended use is for basic navigation and for such applications as determining where the nearest restaurant is. It cannot tell you that your iPod is under the couch cushions and that your iPhone is in the car.