Amazon has a "Kindle" app in the ITunes store - free. So you can buy books from Amazon or download those you have already bought. So, an iPhone or iTouch can read a variety of different book formats.
When my Palm got old, I switched to an iPhone because the iTunes store had so many apps that were similar to things I used my Palm to do. I think you would find an iTouch quite a good replacement for a Palm. Try browsing through the iTunes store and making a list of apps that might replace Palm things you want to do. When you find enough of them, it helps with the decision to switch.
(P.S. your avatar pic is scaring me!!
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