I jailbroke mine, and put some epic Cydia apps on it. Here are my favorites:
Safari Upload Enabler - Upload files/pics from mobile Safari.
Enhanced Folders - Embed folders inside folders. Enough said.
Mobile Terminal - Difficult to get to work on iOS 4, but well worth it.
PHP - Epic server language makes a good scripting language on your iPod too.
DreamBoard - Trick your friends into thinking you have an "iDroid" (Android made by Apple).