I just got an eye twitch thinking about a drooling baby playing with a $500 phone that you can't buy insurance on...
How about you just get a cheap little mobile DVD player and use that? We bought one that we take along when we know the kids have a high probability of getting bored (waiting around at sports events, long car trips, etc) - I think it was $50 at Target. If the kids break it, I don't care (although that thing has lasted about 3 years already!). We bought a couple pairs of headphones, and we have a little CD case with a few movies in there, and voila - hours and hours of entertainment. You could get a few Baby Einstein DVDs for her and she'll love it. Best of all, if she drools on it, crushes Cheerios into it, or drops it, you don't have to go without a phone until you have another $500 to cough up at the Apple store... I'm just sayin'...