I got to play with an iPod Photo for a little while at the O'Reilly Conference. I'm not much of a photo guy, but it's pretty cool to be able to buzz through all those pictures that fast. We even hooked it up to the projector and watched a slide show on the big screen. Folks were buzzing with ideas for low-rate animation hacks -- I bet you'll see some of that soon.
Even though I don't care that much about photos, I loved the color screen and the little album art display while music is playing. And Solitaire in color -- a killer feature!