Today I was playing with my iPod touch and thought to try out some free application from Apple App store. while i was browsing through App store one application caught my attention. Its name is Touch Mouse, application is from Logitech. What it does is , its convert your iPod touch or iPhone into mouse pad, experience is kind of mouse pad that comes with MAC laptop.
You have to install client application on your iPod and then need to install server application on PC or MAC (no Linux support :( ). Once you installed both application, client application will connect to sever application over wifi network and then you can use you iPod as mouse and in addition is also work as keyboard as well.
I tried it with my XP installation over VMWare and on XP it works like charm. I tried to install this application on my Ubuntu machine using wine. On wine mouse movement works fine but its not able to detect button press.
If you decide to try this out here is link.