What can be done more with an old ipod touch(First generation) Hi I had an I pod touch (first generation) with version : 1.1.5(4B1) which I bought from EBAy
long time back in 2008

I had installed latest ITunes and browsing if 
I can find any applications that can be run on this 1st gen iPod.
But most of the apps are generally compatible with 3 and greater.

Are there really any  for 1st gen? If no, what else can be done apart from
playing music and videos..

I had seen http://support.apple.com/kb/HT2052 which
says can be updated to iOS3.1. Has anyone done ...any problems faced..

Any other suggestion you have apart from selling it :-)
Maybe not the best iOS device nowadays but it still makes a nifty remote!
I have an Ipod Touch (2nd gen though) that I use to control my mac-mini media center.
It's very intuitive to manage your playlist (iTunes DJ mode) with the Remote app.
And I use Mobile Mouse Pro to use my Ipod as a mouse. User experience  is not as sweet as Remote but still a great app which eliminates the need for keyboard.