If a friend or family member was looking for a cool portable music/media player with WiFi internet access, I would probably tell them to get the iPod Touch instead of the N800.

If a business collegue was looking for a pocket internet connectivity tool, I would probably tell him to get the N800. It's more functional, and I don't think it's at all difficult to understand or use for non-Linux people, as long as you don't go too far beyond the basics that Nokia is supporting.

Personally I also find my N800 to be very useful as a music/media player because of some specific capabilities that it has that the iPod doesn't (e.g., Rhapsody, FM radio, access to my UPNP media server at home etc.), but that would depend on your style of use.