I got mine mainly for video use. MX player is much better than the stock player, as all controls are onscreen. My phone only has a low res 3.2inch screen, and the battery does not last long playing videos. Web browsing with a small screen is a nightmare, and I only use it if I have to.
I had an archos 5it (for 3 weeks), but the screen was really bad being resistive.
I got the 5inch player as I wanted the biggest screen, and it fitted into a shirt pocket. i'd love a phone with a 5inch screen, but am not prepared to pay more than my pc for one as I don't use it much (I have no friends! lol)
I can use the screen for web browsing quite happily, viewing the page is easier than on a small screen. Double tapping or pinch and zoom is not a problem. For long web browsing, a bigger screen is deffinetly prefferable. I can sit watching TV and loook something up easily on the 5inch device. It can get a bit slow for browsing, but I use advanced task killer to kill background apps. That makes it run faster with the available RAM.
I diddn't like the keyboard for typing, as it does not have a comma (running froyo) but I got a gingerbread keyboard and am much happier now. Using it horizontally, the keys are really big as well. I keep making spelling mistakes on my phone as I'm so used to the player now. I don't use predictive text.
I also use the satnav and the music player in the car.
I use it at work to demmo cameras I sell, and also the new samsung cameras with wifi apps.
As blackdog said this really is a portable mutli use device.
To be honest, buying both devices (5 and 7inch) might might be the ideal solution.