Sony Ericsson just announced LiveView, a new hardware accessory for Android 2.x phones. It's a 1.3" bluetooth mini-display that can be used as a remote control for your phone and worn like a watch.
LiveView connects to your Android phone via an accompanying app. From there, it can be used to display texts, incoming calls, control music, for twitter, facebook and even rss updates and more. I personally doubt I would ever pay for something like this, why do I need to bother with a smaller, less useful version of my phone when my phone is within arm's reach?
But! If you've been in the market for a digital watch (or if you pine for one of those iPod nano watches), I guess I could see your logic behind it. It's a smarter watch, kinda. Here's how it works (it's not a touchscreen, by the way):