The ZipIt Wireless Instant Messaging is a kid's IM device with built-in WiFi (802.11b), 320x240 grayscale LCD and thumb-style keyboard all in a small package with a LiIon battery. Current retail price $100.
Out of the box, the ZipIt device will connect to WiFi networks (802.11b/g) that have Internet access and connect to various popular IM services (AOL, MSN, Yahoo).
This webpage discusses hacking the device to use for other things. Using some WiFi tricks you can perform a software reflash upgrade of your ZipIt device to run Linux direcly. For more advanced hacking, a hardware modification is recommended