Well she got it a few days ago, and it is actually really cool... some thoughts
1. $500 she nearly paid for the 60GB variant, which is pretty overpriced considering what you can get for that amount of money.
2. The device has a stunning chrome finish, and is thin as three stacked credits, but seems very fragile. There are reports that the chrome finish can easily fall apart, so she had to get a proper case for it. Unfortunately, as protective as the leather case is, it hides all that makes the device look stunning... so yea.
3. The bundled headphones are crap. Aside from the expense of a screen protector and a leather case, she will have to buy Bose headphones.
4. The UI is stunning. I have used touch screen devices from tons of other companies, and nothing comes to the simplicity in design and smoothness of the ipod touch interface. It is also very responsive and really fast. The screen quality is also quite good, though a half-step behind Samsung's AMOLED devices.
5. The 64GB flash drive is nice, but the device can't be used as a portable hard drive unlike the older iterations, which is ridiculous. Apple seemed to have made the thing even more restrictive.
6. So what my sister did the first hour she bought it, was hack it using some jailbreak software. Quite proud of her for doing that. Suddenly the device can be used as a portable harddrive, and she can download a shitload of applications. She feels guilty about pirating them, but oh well.
7. The games are actually quite excellent, and definitely quite a few notches above what I expected. The popcap games are especially good, like Peggle, Bejewled, and of course, Plants vs Zombies. There are some other games on there as well, and while the touch screen isn't ideal, it isn't as bad as I expected.
8. Other applications are pretty good. Safari seems to work very fast on it, and is designed well to fit on it.
So overall, while I think it shouldn't be priced much higher than a PSP or a DS, and I would never get one for that price, it isn't bad as long as you hack it. I wouldn't pay more than $250 for it though.