It's still used a lot, just not as a phone. I have it semi-permanently in child-safe Airplane Mode with wi-fi turned back on for surfing; it's used for that, gameplaying, and entertainment for my two-year-old daughter.

I use my 3G as a work phone, so using the old iPhone for entertainment means I am more likely to have the 3G iPhone properly charged and configured for work.

I don't think I would get more than low $300s for the 4GB 2G, and I could only buy an 8GB speaker-equipped 2nd-gen Touch for that kind of money.

But should I get rid of the 2G while it still has most of its original value? I think I'll be able to get the next-gen iPhone free(-ish) through work later this year, so the 2G will be even more redundant by then.