IPhone – The camera lens on iPod touch 5th gen

It's a bit crazy, but on the 4th gen iPod touch the video is actually higher resolution than the still pictures:

Cameras, photos, and video

• Video recording, HD (720p) up to 30 frames per second with audio; still photos (960 x 720) with back camera

720p video is 1280x720, whereas the photos taken are only 960x720.

Camera sensors are not only limited in their resolution, but also in the rate at which the image data can be read off of them.

Just because a sensor can take 5-megapixel still images doesn't mean that all of that data can be read off the sensor fast enough to record (smooth) video. Even reading just a subset of the pixels (called pixel binning) to reduce the amount of data may not be enough to get 1080p images at, say, 30 frames per second.

A web search indicates that the iPhone 4 uses an Omnivision OV5650 sensor. According to Omnivision's own product sheet for that sensor, it's limited to 720p video, so it's not just a software thing. I couldn't find any specifics about the sensor in the new iPod touch, but it's almost certainly a different one if it records 1080p.