I get that, and it's a source of much frustration. The idea of buying an iPhone for your four-year old strikes me as lunacy. These things are marvelous at keeping kids entertained and quiet when you're waiting at a restaurant or checking out at the grocery store, and expecting that there will only be one user of the device ever is annoyingly myopic. It also occurs to me that if you're going to gate it at install time, the iTunes password already does that. Don't give the kid the password, she can't install anything that isn't approved.
There's a tremendous disconnect between how it should work and how it does work. If I want to put my device in "four-year-old mode", I shouldn't have to uninstall everything to get there.
The multiple accounts thing is a good point. I hadn't considered that, but it makes the "single user device" seem even sillier - why can I attach multiple accounts to a device that is otherwise completely inappropriate for multiple people to use at the same time?
I'm aware that the Touch is less expensive, but my argument is that "Just buy a separate device for your 4-year-old" is an insane line of reasoning, whether it's a $200 iPod or a $600 iPhone.