The iPod touch is a music and video entertainment device that happens to have wifi and a web browser built in, mainly because Apple happened to have a bunch of that stuff sitting around from making the iPhone. Why did you ever think it was a PDA, or even aspired to be one?
Maybe the fact that it has a calendar that syncs with my computer's calendar, an address book that syncs with my computer's address book, a photo app, a calculator, and nearly every other application that a PDA has. Maybe the fact that Steve called it "an iphone without the phone."
Yeesh, the guy just wants a couple more apps, then it would work for him as a PDA. Not everyone needs their PDA to run Excel and program in COBOL.