There's some really good advice here, thanks guys.
I still am not 100% on what to do, but I feel like if I sold the iPhone 4 it would be good. Because if I hold on to it, it'll just lose value.

This way I can get him something else, and if I change my mind I can always buy another iPhone 4 off ebay. He is a normal kid, not too technical (he cant handle the N900). Besides a DSi from mum (last year), he's never actually gotten anything valuable for himself (i'm a little poor), and I feel like he should because I was the one who sort of fathered him.

The Alienware is a really good idea, that way he can not get frustrated using my fat, heavy, burning, AMD laptop. If I have enough, the 11" Macbook Air might also be good (its very portable like an iPad).

I still appreciate any ideas