Jenny, came across your website and use of iPod touches in school. I'm the developer of abc PocketPhonics - an iPod touch educational app. Don't know if you've come across it? It's focused on phonics and letter formation. It's typically in the top 20 in the Australian Educational section of the App Store.
My wife uses it in school (we're based in England) and I know some other teachers use it in UK and US. Bit of a speculative note therefore to see if you do use it and if you have any feedback.
I have read the discussion on the forum and visited your blog. What you are doing sounds very interesting and is trail blazing. As principal, I have just initiated the MacBooks in the school with Yr 4/5s commencing in 2010. I would have liked to use the iPod Touch or Iphone but I think we need to have thisw intermediate step so we can get teachers and more importantly parents into the idea. I am interested in how you readied the students for this huge leap into the freedom of communication. Did you or the school look to doing any staged goal setting, attitude/ethic buidling so that the normal fun/motivational learning style of primary students was modified. Cheers Graeme