I have two in elementary school, 2nd grade and 3rd grade. Both our school district, and even more so our elementary, are somewhat at the front of technology, but not 'bleeding' edge.
Went through this process at our house, both this year and last year at this time. They both have iPod touches (previous generation). iPads are in their future, but not just yet.
Many great points in this thread already....but a couple I've not seen....
--While there are many educational apps in the App Store (and some very good ones), many of the web sites recommended or even required (for home study) by teachers are largely flash based (at least for now). So, at home they 'play' on their iPod touch (or my iPad when I let them), and they research/homework on a Mac Mini (supervised). Their computer lab at school is all desktops, FWIW (Windoze

).
--If you get them a device that has a camera (including video), gps tracking technology, multi player games (and chat/Facebook/Twitter connectivity) via the external network, etc. etc.....be sure to monitor the restrictions settings (and apps) as deemed appropriate for that child. While we see it as a an educational tool, it definitely isn't to those who want to abuse the technology.