Remember this case from China that allows you to use a regular SIM to make phone calls and SMS messages from your jailbroken iPod Touch? It’s been reviewed.
Not so surprisingly, it works, but it’s buggy. You can’t adjust the call volume, the SMS delivery shorts out occasionally, etc. The Peel 520 was a neat idea, but if you want to use your iPod Touch as a smartphone, Sprint’s forthcoming 3G hotspot case combined with a good set of headphones and a SkypeOut account seems like your best bet… no jailbreak required.