An Apple iPod Touch review, with special attention paid to use with Linux and open formats:

Pros:

• Very nice high resolution screen. (480×320 at 163dpi)
• User interface is very slick and easy to use after a minimal learning period.
• Built in WiFi (802.11b/g) with very good mobile browser (Safari).
• Methods to hack (jailbreak) it and install 3rd party software are widely available, and many 3rd party applications are already developed for it.
• Base model has a generous 8GB of storage, 16GB and 32GB models are available.
• Design: Aesthetically, it's solid. Hardware, software, feel and aesthetics, everything is great!
• Battery life is good (5 hours of video, 22 hours of music, use of WiFi reduces this significantly).

Cons:

•  It's expensive. Almost $300 for the base model. (I won mine in a raffle, otherwise I wouldn't be reviewing it!)
• Funky machine readable file-system format for storing music: Why is F03/KLJE.m4a my Spin Doctors – Cleopatra's Cat? What's wrong with a human readable filename, Artist/album/song storage paths, etc…) 
• Doesn't support music encoded with Ogg Vorbis.
• Doesn't mount as a standard USB file-system.  (You need iTunes, or a iTunes clone to move music/photos to it, and can't use it as a USB drive.)
• Uses a non-standard (not a mini-USB) connector. (Yet another cable to carry around.)
• Integrated battery prevents easy customer replacements.
• Lacks many features of the full iPhone (Bluetooth, camera, cellular data/radio, speaker, microphone).
• Chrome on the back scuffs MUCH to easily. I've carried mine in dedicated hip pockets and after only a week I still have visible scuffs and scrapes on the "chrome" back.  Hopefully the glass on the front will resist scratches better than the "chrome" on the back. I still have the plastic protective cover that it shipped with over the glass screen, and am considering buying a static stick screen protector after my experiences with scuffs on the back.

Although a shorter list, the positives are very compelling. Despite the long list of negatives  I am reluctant to put mine up on Ebay despite the many shortcomings I've mentioned above. Most importantly, it's got a wonderful screen. Much better than watching movies on my Motorola v3xx phone! The screen is big and sharp enough to read e-books, something else I certainly wouldn't attempt on my V3xx.

User Interface: Overall it feels responsive, and is mostly intuitive. I had to click on everything at first to see if it was a button, and if it was, discover what it did, but I was able to figure out the entire interface by exploring without  accidentally deleting anything. I only have a few gripes, caused mostly by the fact that I'm a power user who doesn't like to wait for fancy animations to complete before making my next input. The home button needs to be pressed a bit harder and longer than I would like to return to the home screen and the sliders ("Slide to unlock", etc…) require a very deliberate pause at the end or they will automatically retract. I'm sure this was designed to prevent people from exiting applications accidentally or turning their iPods on in their pocket, but I find having to leave my finger in place for an extra heartbeat annoying.

Multi-Touch Input: The much ballyhooed "multi-touch" input is all well and good, but really doesn't add that much to the interface. Anything you can do with two fingers could have been done with one more on-screen widget. The Apple interface is slick, but they could have done it with a standard single-touch screen. I dislike the fact that with the capacitive sensing, you can't turn your finger backwards and use just a nail for fine control (and to keep grease off the screen). Instead, to make sure the capacitive sensor detects your touch, you have to mash your whole fingertip down on the screen, which adds to the screen-smudge factor.

Third Party Applications: I found many useful 3rd party applications for the iPod Touch (which will also work with the iPhone). In fact, several of these applications (OpenSSH server, mxTube, MobileCast) helped make up for the lack of iTunes support for Linux, and without them I wouldn't be able to use the iPod Touch without booting into Windows. [For example, I use MobileCast to download and listen to podcasts, and mxTube to download demo movies that I want to play on the iPod, ignoring the built in iTunes podcasts and videos portions of the UI.]

Use with Linux: It is possible to use the iPod touch with Linux, but you will probably need to use a Windows or Mac computer to initially jailbreak it. I found that the newest version of amarok and libgpod provided good music and album art support. (I am still lacking the ability to natively transfer photos or videos without using YouTube).

Value Proposition:
If all you want is a music player, you can buy an Insignia flash based music player that does not suffer from any of the above failings for less than a comparably sized iPod Touch. (I have one, mostly because it cost less and supports ogg vorbis music.) It's smaller, cost less than $100, and although it lacks the super sexy coverflow music browsing application, it's a better value as a dedicated music player.

As just a music player, the iPod Touch is slightly too big, too expensive, and doesn't play well with Linux. However, it's not just a music player. The larger screen, full featured video support, plus WiFi support and Safari browser makes it a full-on media player, e-book reader, and web tablet. It certainly beats the Nokia internet tablets. (Well, after you Jailbreak it and get a BSD/unix subsystem on it.) As long as you can find a WiFi signal, the web browsing experience is about as good as you are going to get without a keyboard or full sized screen.  

Missing Bluetooth & Cellular Radios: Hardware wise, the lack of Bluetooth is annoying. Speaking as somebody who rides trains and has to make transfers while carrying junk, having headphone or earbud cables is annoying. You may not notice it until you try out a pair of bluetooth headphones, but believe me, wireless headphones are great! The lack of bluetooth also means that you can't pair it with a phone that has a data plan to make up for the fact that the iPod Touch can only get on the internet at WiFi hotspots.  I don't mind the lack of a camera or cellular radio as much as the bluetooth.

Buy a (2nd gen) iPhone instead:
In fact, every time I wish for a feature on the iPod Touch, I can't stop thinking about it's big brother, the iPhone. A GSM radio for cellular data would prevent the loss of internet connectivity when traveling between hotspots, Bluetooth would allow the use of wireless headsets and headphones, and the camera would be a nice addition as well. In short, about the only advantage the iPod Touch has over the iPhone is a (relatively) cheaper price, and a slightly smaller form factor. However, it's not THAT small. If I am going to be carrying it around, I would prefer to add an inch and be able to replace my phone. In short, unless you do nothing but listen to music, buy an iPhone instead. How many iPod Touch owners don't also own a cell phone?

Due to my experiances with this iPod Touch, I am seriously considering buying a 2nd generation iPhone when they are released (as long as they support 3G high speed data).