A 64MB Compaq iPAQ 3670 can be had for $299 after rebate from CompUSA. If you are gonna spend the big bucks, it makes no sense to go with Palm. And you can upgrade that iPAQ to PocketPC 2002 for $30 from Compaq.
And for an MP3 player, you can't go much better than the PocketPC platform. And the color screens are also larger. And you can also get a fold-out keyboard for the iPAQ. And PocketPC also has the best games (and a wide variety at that) including all kinds of card games, side scrollers like Rayman, casino, helicopter simulators, race car sims, shoot-em ups, SimCity 2000, upcoming Need for Speed 4, etc. etc.
So for everything you have stated, the PocketPC is your best bet.
And I also like the capability to display and edit PowerPoint presentation in real time on my iPAQ as well with the Presenter software. Just about anything you can do with the Desktop version of PP, you can do with the iPAQ. I also love Streets 2002, and the new Terminal Server with 2002. And Money 2002 for the PocketPC syncs up perfectly with my Money 2002 for the desktop.