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Android has the features you're looking for.

It doesn't have the main feature of "DAD I WANTED AN IPOD TOUCH" unfortunately.

In which case dad needs to learn the important 'Not be a pushover' feature and stand up to his own kids.

Specifically there is the Galaxy Player (http://www.amazon.com/Samsung-YP-G1CWY-XAA-4-Inch-Galaxy/dp/...). I had to look it up as I was unaware of any comparable device. The price is comparable to the IPod Touch as well.