After much deliberation, the price cut ($300 to $229) turned me in. I bought the 8GB 2nd Gen iPod Touch in October. Here's my review

The Good
  1. Calendar, Clock, Photos, Safari
  2. Free Apps (Dictionaire, Facebook, Remote, Games)
  3. Accelerometer
  4. Bright beautiful 3.5" display
  5. Built in speaker
  6. Light weight and sleek.
  7. Greenest iPod ever. (See specs)

The Bad
  1. Battery life with Wi-fi enabled
  2. No button to pause/play/skip
  3. Accurate rewind/forward in Audio Books is impossible.
  4. Cannot use as flash storage
  5. Display is not true 16:9 (like N97 will be!)

The Ugly

  1. Indian iTunes Store is severely handicapped. No Music, No Podcasts and fewer apps.
  2. Users cannot replace battery

Desirable additions (in order of preference)
  1. Add built in microphone (to use more iPhone apps and Voip)
  2. Add GPS
  3. Add FM
  4. Build the Indian iTunes store

Alternatives considered
  1. BB Bold - ~$850 (unlocked in India) - Smaller screen, Cost
  2. Zune 120GB - $249 - Smaller screen
  3. Asus Aspire One - $379 - 8.9" Linux - Cost, weight

My next hand-held would be either BB Bold OR Nokia E71 when 3G services launch in Bengaluru in April'09.

p.s. - Why not an iPhone 3G in April? - Cost and I already have an iPod Touch :-)

p.s. - Why iPod after having denounced PMPs and eulogizing a Zune over an iPod earlier? Because of the display, apps and audio books.

Update - Added the point on environmental goodness.