As a previous iPod Touch owner and current iPad owner, the iPad is most definitely a better device for lengthy video viewing on long flights. The iPod Touch is handy for its size, but even the 3.5" screen leads to squinting and eye strain after more than 30 minutes. The same holds for web browsing. With so many great smartphones available for free or under $100, the iPod Touch may become a niche item for teens and tweens who's parents want to avoid the cost and likely overuse of a smartphone data plan.

Also, check out ZumoCast for video transcoding/transfer in one step over WiFi. It's much easier than transcoding manually on a PC and then transferring. It eliminates a sometimes finicky step as well as the need to connect to the PC for transferring. It also allows streaming of video to the iPad without the need for transfer, as well as both streaming and transferring when away from home (3G, WiFi).