Excellent. I am glad you have it working.
You may need to change the order your computer chooses a network interface to connect to the internet, it sounds as though it wants to use ethernet first then dial up. Check the help thingy. I can tell you how to do it on a mac but someone else will need to help with windows.
Now that you have the device set up and your computer has wireless you may not need to use the ethernet cable to connect to the router. I presume windows is telling you there is a wireless network available?
If you get an iPhone it has all the features of an iPod touch and can make calls. Coverage in your area will be a big factor. The iPod touch 8GB is quite cheap though.
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