OK here are my predictions so far based on the rumors
screen on the controller can be used for
-multiplayer splitscreen gaming, being able to hide things from opponent, such as Maro Kart item, FIFA/Madden team tactics
-minigames, while not having the TV on, so small iPad type games like boardgames, casual games and etc.
-extra screen for map, inventory and etc
-touch screen can be used as an extra input or trackpad, for example drawing stuff on the tv by using touchscreen (could work on a game like Okami)
-touchscreen could be used to check messages, friends, downloads and etc without exiting game, hell you could do this stuff without the TV on.
-touchscreen could be used as a keypad for messaging, or a trackpad for surfing the web