I've had an iPhone for, let's see, all of three months and I'm still in love.
No, I couldn't receive e-mail when I was out in the middle of Nowhere, Utah a week ago, but who could? And that's been my only difficulty.
What do I do with my iPhone? E-mail, of course. Connect to the Web. Approve blog comments. Find a good place to eat. Scramble. Read books on the Kindle app (though I prefer the Kindle because of the size of the page and the length of the battery). Listen to music (occasionally). Make calls (especially when lightning knocked out our home phone...again). Take pictures (a few, because they cannot-apparently-be removed). Twitter to see what others are doing. Facebook.
Okay. I use my iPhone a lot.
How could students use it?
First, we would need the technology. Not sure iTouch is a great tool for five-year-olds. But, hey, who knows? Who would have thought we'd have two-year-olds using computers?!