Kind of an old thread, but I have made it rise up. After dinking with my wife's iPod touch for a while, I decided I wanted one. Thanks to family that don't know what to buy me so they just give me cash, I now have an 8GB 3rd gen iTouch.
I've found this thread very useful, though. None of the apps I searched for came up dead or anything. I want to contribute, though, so here's a handful of apps that I've fooled around with in the last 7 hours I've had the device, along with some of the apps that she has installed. Everything listed below is free.
Google Earth - just like the Windows version
Flashlight - probably won't use it much, just turns the screen white so that it gives off as much light as possible. Would be more useful if it had access to the brightness slider.
Bubble Wrap - it's free, and mindless. My wife loves it.
Traffic Rush - it's also free but not so mindless. We'll see if it has any staying power but it's cool.
CannonGame - Discovery Channel-sponsored scorched earth-type cannon game.
Minesweeper - looks just like Windows 95's minesweeper
NetNewsWire - RSS reader that syncs with NetNewsWire for OS X and FeedDemon for Windows to track what's been read, so you never read the same feed twice. Also syncs with GoogleReader.
eBuddy - MSN/AIM/etc. IM client
I also paid for a pair of apps - Tetris and Bookworm, both of which are pretty good. Tetris especially.
"And and if you start to bleed, stop wiping." -whm1974