1. I would wait until an actual update to the product comes out. Right now the iPod Touch is old tech at a high price. Bad combo.
2. Check out used iPhone4. More RAM, better camera, coated glass, flash on the camera.
3. Samsung PMPs with bigger screens are coming out soon. If I didn't have my iPT4, that's what I'd get.
4. Kindle FIRE. If you just want this device for around the house then look into the FIRE but naturally a 7 inch tablet won't fit "easily" into your pocket.
5. Used Android phone. There is a big used market popping up on used Android phones. Many models with many features. Do your homework if your interested in these because there is a lot to choose from.