I wound up finding a mint-condition unlocked 32 GB iPhone 5 white/silver color on Craigslist for $280. Still has a little warranty on it as well. Figured since the T-Mobile monthly is only about $12/mo w/fees for up to 1 GB data, might as well. Even if I decide to cancel the phone service, I think for that price it's worth more, and is faster, than the current gen iPod touch.
She's pretty happy with it of course as well.