Maybe not the best iOS device nowadays but it still makes a nifty remote!
I have an Ipod Touch (2nd gen though) that I use to control my mac-mini media center.
It's very intuitive to manage your playlist (iTunes DJ mode) with the Remote app.
And I use Mobile Mouse Pro to use my Ipod as a mouse. User experience is not as sweet as Remote but still a great app which eliminates the need for keyboard.
Select "Enable disk use" or "Manually manage music and videos."
Either one will allow you to use iPod
as a drive. If you select "Manually
manage music and videos," iTunes won't
automatically update iPod with the
iTunes library. If you want iTunes to
automatically update your iPod, select
"Enable disk use" instead.
The iPod disk icon appears on the desktop and in Finder windows, and in
My Computer/Computer in Windows.
Double-click the icon and drag files
to or from iPod's window to copy them.
Make sure to eject iPod before disconnecting it from your computer.
Tip: The iPod display will say "Do Not
Disconnect" when disk use is enabled
(iPod shuffle's status light will
continue to blink orange until after
it is ejected). These are reminders
for you to eject iPod first.