Taken all at once, the spell may seem contradictory. However, what the spell actually means is that the caster can cast the spell parching touch and thereafter make a number of parching touch attacks equal to his caster level, but the effects of those parching touch attacks are instantaneous, remaining even after the caster makes his last parching touch attack.
See, the 1st-level Sor/Wiz spell parching touch [necro] (Sandstorm 118-19) has the entry Duration: Instantaneous, but the spell also has the entry Target: Living creature or creatures touched (up to one/level). Duration on Subjects, Effects, and Areas says
If the spell affects creatures directly (for example, charm person [or, for our purposes, parching touch]), the result travels with the subjects for the spell’s duration [which, in this case, is instantaneous—essentially forevermore until its effects are somehow healed or removed]. If the spell creates an effect, the effect lasts for the duration (176).
This is why the spell's description must say, "You can use this melee touch attack up to once per caster level." (Not incidentally, this way of carefully crafting touch spells that deal damage is what makes the spell shivering touch subject to DM oversight.)
While a caster could, in the abstract, cast the spell at the day's start and go on madcap adventures all while holding the spell's charge, touch spells generally make impractical long-term buffs. First, buried in Holding the Charge is the horrible accidental discharge rule that make this unpalatable: "If you touch anything or anyone while holding a charge, even unintentionally, the spell discharges" (Player's Handbook 141 and, yes, that's the whole thing… whatever it means and this DM suggests ignoring it). Second, and more importantly, the same section says, "If you cast another spell, the touch spell dissipates" (ibid.).
Thus it's possible if a wizard is a parching touch specialist for the spell to be his all-day jam—casting no further spells but still parching the crap out of foes until he exhausts the spell's uses—, but I suspect such wizards will be rare.