I recieved an iPod Touch as an early birthday gift from my husband. I'm a tech junkie, so upgrading from my iPod Nano was a big deal for me. The interface on the Touch is amazing, although I noticed that it isn't 100% responsive - sometimes I have to tap the same button several times, or it registers having touched a different one than I was going for. It's also a tad annoying that it only works with skin contact, as it means removing gloves in winter and no stylus for handheld organizer users. The videos play on it very well, and the audio quality is very good - I listen to a broad spectrum of music though, so it's hard for me to test various audio set-ups, as what will work for one song won't for another. Photos look great on it, and the calculator and other small functions are great to have, I use them while shopping a lot. The size is great, it's very thin but big enough you can really watch the videos on it without giving yourself too much eyestrain.
Overall, I love this device, and so does my husband - he got the 8gig version for himself (and he already had a 30gig iPod video!) The price is a bit steep, but for the technology involved and the features, it really is worth it if you can spare the cash.