I think it is a good idea that wasn't fully developed (Newton anyone?). Once again Apple has overlooked features that the users want. I think these are what Apple missed on their new device:
1. Webcam-This a no brainer. Every netbook that I have seen as well as almost every cellphone sold today has a camera.
2. Storage-How is this supposed to be a media device without a lot more storage? A relatively inexpensive net book has more storage. they should have at least doubled the capacity of the 3g Touch.
3. Display-They should have at least tried for 16:9 display since they are billing it as a media device.
4. USB Connectivity-Can anyone say read and write to a thumb drive? USB keyboard? EyeTV?