Slime covered (heh) most of the stuff I would've suggested, but I'll add a few.
Dungeon Hunter, which is basically Diablo in your pocket.
Mevo and the Grooveriders, a fun rhythm/platform game.
Alive4Ever, twin-stick Zombie shooter with RPG elements
Undead Attack! Pinball - remember Pinball of the Dead on the GBA? Pretty much.
Hi, How Are You? - weird, fun platform/puzzle game based on the art and music of Daniel Johnston
UniWar, awesome TBS game.
I'll also mention a couple of neat/useful apps you should check out:
Stanza - this is a ereader app, and it's free. Compatible with a ton of ereader formats. iPhone/Touch makes a surprisingly decent book reader once you tweak your brightness/font/background.
Comiczeal, a comic book reader.
Both of these use desktop programs to transfer/convert files to your iPod, but they're both extremely easy to use.