The HTC Touch, which could be used with a finger, but came with a stylus, was not a "smartphone," nor was it the first touch phone. At best, the HTC Touch was a feature phone, with according to its specs, could select at a finger or "stylus-free touch, a music player, a photo album, a video player and a picture-based contact book." It had 64MB of on board storage, plus additional SD card storage for content, but no additional storage for apps.
There were resistance touch phones available prior to the iPhone but they used styluses.
The first actual touch screen phone was made in 1992 by IBM for landline handsets: The IBM Simon:
The $799 Prada (LG KE850) was the first capacitance touch screen cell phone because it was released a month before the Apple iPhone, but it was only a single touch capacitance screen, unlike the multi-touch capacitance screen of the iPhone.
As for the HTC Touch, unless you were living in Great Britain, your memory is most likely faulty because you could not have had an HTC Touch when Apple was shipping the iPhone. The HTC Touch was only available in Great Britain where HTC announced it on June 7, 2007 and actually released for sale there in August/September; it was not released elsewhere until November of 2007, when they finally made it available in the US on T-Mobile.
"HTC Touch Review: An iPhone It Is Not
Reviewed Jun 11, 2007 by Vince VenezianiWith Apple’s iPhone quickly approaching its release date, HTC and Microsoft knew they had to squeeze something out to compete. Granted, they’ve been working on this concept for years before they even knew about the iPhone — that’s how the industry works. That said, HTC’s Touch looks to offer big features in a small package that relies heavily on a touch-interface. It uses Windows Mobile 6 combined with an overlaying GUI called “TouchFLO” that provides a similar experience to that of the iPhone. But can it compete with the #1 product that isn’t even out yet?
No, but it’s still an interesting phone. See, the HTC Touch won’t even be out in the US until Q4 of this year and will most likely see its way to T-Mobile. Recently released in Europe, the Touch has nice features that are becoming more commonplace on HTC devices." — TechCrunch Review of HTC Touch, June 11, 2007