What's odd is the site in question hasn't done anything in the last six months, has a PR of 0 and currently has a default installation of wordpress on it(including the default first post). I doubt that this person has even visited the site or checked it's traffic or they certainly wouldn't be inquiring about advertising on it.
Now having said that how would you respond? I'm thinking I maybe grab 4 or 5 PLR articles throw them on the site and ask for $25/month and see what they say. maybe even say I'm not using the domain and offer to sell it to him?