We have an Archos player with a touch screen that we allow our 3 year old to play with. It is about the size of a mini dvd player, in fact it fits in the same size case. It holds 80 gigs so we can put movies on there, it can have music, and it can handle widgets, or programs that you can get for it. So it's basically a little laptop. It comes with a remote that has a keyboard, and there is also a keyboard program in it that comes up on the screen so he can type. At the moment he is in his bed watching 'Meet the Robinsons' on it. It costs around $500 and you have to buy the software to go with but it proved a treasure on our last roadtrip. Oh, it also can hook up on a wireless network so you can surf the internet with it. It has TV capabilities as well. Perhaps this isn't at all what you're looking for, but I think it is quite cool and we like that he isn't taking dvd's in and out and scratching them up, and he likes the notepad program and the touchscreen. He's fallen asleep with it once or twice and it doesn't have a problem. Anyhow, even if you don't get this for your son you ought to check them out, they're just new and fun and functional.
Another suggestion is to find a business or school that is getting rid of old computers and get one just for him. The problem we found at that age is the lack of fear of pressing buttons and our son crashed the whole system, but my husband is a computer geek and can fix it.