Welcome to PPCT!
To answer your questions:
1. There are a couple of long threads on the WM5 upgrade for your iPaq - I'd suggest using the forum search function. The short version is it's worthwhile
if you're prepared to do a bit of hacking.
2. There are a few VGA pocket pc's around that you might want to look at that aren't called Dell, unfortunately most of them are not available in the US - Loox N560, Loox C550, Acer N311, and the one most everyone is panting over, the O2 Flame which should be released next year. Have a look through this
link. There are others of course like the Sharp WZero3, but they're really hard to get and may come with a different language OS.