Mine is now essentially an iPod. I restored it, hid the unnecessary Apple apps in folders, turned on all the restrictions, leaving only the Video app on the front screen. It's now loaded with as many kids movies from my media library that the 32 GB can hold and connected to the rear entertainment system in my SUV via composite cables. Now I don't have to worry about carrying DVDs in the car and my kids can watch whatever movie they choose without bothering me while I'm driving.
Going to be doing the same thing to my wife's old 3GS for her car now that she picked up a new 4S.