I think it's great! It's also very expensive. :(

A lot of people in my office have one (everyone but me it seems). The interface is amazing. In terms of size it's a little large for my tastes (can't really put it into your pants pocket) but I absolutely love the screen quality - it blows away the 240x320 screen on my phone now. It does however attract a lot of thumbprints. Everytime I see one there are thumbprints all over the screen.

Now that the SDK has been made available there are going to be A LOT of applications and games in the future. As far as games are concerned I think it will be the #3 handheld (after DS and PSP of course). The fact that it converges both phone AND portable music player AND portable video player AND game console makes it a very, very attractive piece of hardware. (less to carry ;))

I think I'll wait for the next generation. They have to make the unit smaller for me to consider it. Have any of you seen the size of the iPod touch? It's actually smaller than the iPhone and you can fit that in a shirt pocket. (probably too big still for jeans). Hopefully by that time they'll have 64GB flash memory in it as well. That would be more than enough for someone's entire music collection, a handfull of movies, and games/applications.