I just purchased the Earphones With Remote and Mic ($29) from Apple. This little add-on gives the iPod Touch voice recording and audio input. What can you do with it?

With the free Fring app, you can make voice calls using Skype or SIP services. I believe Fring also supports voice chat on MSN, but I haven’t tried it yet. I made a test call to my cell phone, and can assure you that it does work. Depending on the service and who you call, the calls may be free, or may incur a small fee (as little as 1.5¢ per minute or so, but YMMV). Obviously if you don’t sign up with anything that requires a credit card, you should be safe.

Another app called Truphone, also free, provides similar services. You can buy credits online for calls to regular phones, while calls between users are free.

With various apps such as iRecorder, iTalk, or QuickVoice, you can also record voice notes. Some of these apps will transfer your notes to your computer.

I’ve heard that the sound input also works with digital instruments like iRecorder or Ocarina, meaning you can make music, but I haven’t yet tried those. [Edit: iRecorder works, although you have to hold the mic between your lips, which may bother some users; the current version of Ocarina doesn't support the iPod Touch.]

While a mic add-on doesn’t make the iPod Touch into a virtual iPhone, it does close the gap some. One obvious limitation is that with an iPod Touch, you must be near a wifi access point. You can’t make cell phone calls from anywhere, as with an iPhone.

Now if only I could find a camera add-on….