I got an iPod Touch for Christmas and one of my favorite apps is Hipstamatic. I love it. Here are a few pictures I have taken so far. The only downside I have found is their custom prints (if you want real prints) are expensive, and there's no way to get them printed properly by snapfish, etc. But the pictures come out really neat, and it's a lot of fun to play with.
The first two are where at I work, at Perkins School for the Blind in Watertown, MA. The third is in Cambridge, MA. And look at this great picture of my niece I took last month! I love how the lens and film I used make this picture look like it's one of my childhood pictures.
Their website is at http://hipstamaticapp.com/ and you can download their app in the app store. It's not very expensive, and for me it has been tons of fun.