IWOOT offers 3.5-inch PMP
IWOOT has come up with a relatively budget portable media player that also includes television functionality. Although it's not branded, the player in the picture on IWOOT's site does say "August", though that's not a company we've heard of before.
The screen is 3.5-inches across, and it can recieve Freeview. It displays 320 x 240 pixels, and can play back from external media via a USB stick. There are two games included, it can be hooked up to the TV, and it'll play AVI's, MPEGs, MP3, WAV files and JPEGs.
There's also an SD/MMC card slot, for upto 8GB of storage - it doesn't seem to have any onboard storage provided. The rechargable battery will do you 10 hours of audio or 3 hours of video before it gives in. There's also an EPG and subtitle options.
The unit has built in speakers, or if you don't want to irritate people on the bus then you can use headphones. It costs £95 and it's available now.