What does "Wait State" access mean on a MCU's datasheet and how does it affect me?
The wait state is an extra bus clock cycle that is added to the memory access to allow time for the information to be extracted and appear on the processor bus.  This addition of wait states will limit your processing speed to less than 60MIPS (whatever that means).  The AVR32 has a banked/interleaved flash memory design so that the wait states are hidden for straight line code allowing it to access program flash at the full 60MHz but as soon as you execute a branch or CALL then this will break the interleaving and incur a wait state penalty.

The AVR32 can run code from its RAM but this is a somewhat limited resource on the 32B devices.

If you REALLY need the full 60MIP operation for your code to function then you will have problems.  How will you cope with interrupts taking processor time.....