American Airlines had to compete with likes of Jetblue and their in-flight DirecTV service. But that's pretty hard to do when you're already bleeding cash all over the run way.
Instead they decided to hook up with Archos and offer the 605 PMP on domestic flights, or the 704 PMP on transcontinentals. But don't get too excited if you are flying domestically, the program currently only applies to flights between Chicago and LA. And will cost you $8, unless you're riding in style in business or first class.
American Airlines to offer PMPs [Coolest Gadgets via Sci-Fi Tech]
[Edit: Fixed 3rd grade spelling mistakes.]