Guys, come <i>on</i>. The bit about being a replacement for the iPhone was a joke. It's a toy. It's meant for nerding around with. It's not a production device. You probably shouldn't be depending on it to actually <i>work</i> more than 10% of the time.<p>It's a model airplane. It flies, it's kindof neat, but it's pretty much totally pointless beyond being tons of fun.
It's a great demonstration of what can be done with an 8-bit RISC microcontroller.<p>The biggest downside is that AVRs can only execute code from flash ROM. You can't just throw apps on an SD card and run them; the list of apps (which seem to be instances of C++ classes) is hardcoded, and adding a new app requires reprogramming the whole chip.<p>An intelligent bootloader that could burn executable files from the SD card into ROM would be awesome. Yes, you're only limited to about 10,000 writes, but coupled with Contiki-style multitasking, this could be quite cool.<p>The other idea (which not many people have tried) is to make some kind of "virtual machine" that interprets bytecode from RAM. There is a Forth implementation (amforth) but not much aside from that. Things get really tight when all you have is 2K for data <i>and</i> bytecode. I'm sure a couple demoscene coders just scrambled off to get working on that after reading this. :p<p>Rossum has also done some extremely impressive stuff with ARM chips as well, including the RBox, a game console that's literally the size of a coin: <a href="http://rossum.posterous.com/building-the-rbox" rel="nofollow">http://rossum.posterous.com/building-the-rbox</a>
This may not be the device you are looking for but the idea is not totally crazy. Powerful ARM devices can be had for a few hundred dollars. IMHO, the real trick is to implement the communications. With VoIP instead of voice, instant messaging instead of SMS, the day when you can use WiFi rather than mobile wireless may be coming.
It might not be as interesting as building your own, but the Palm Pre gives you root access and Palm is very supportive of third party app stores. So if all your after is a more open touchscreen device you aren't forced to build your own.
Nexus S? Nexus One? Nokia N900? OpenMoko FreeRunner? OpenPandora?<p>There are more than a few more powerful alternatives to an iPhone that are open source and ready to hack. Most of them can even make phone calls.