Well, basically this appears to be the iPhone with the GSM radio removed (and an upgraded memory chip in the 16GB version). This is all well and good for them, though I suspect the price overlap between the Touch and Classic will cause Classic sales to lag, especially since the Touch's screen is bigger.

I admit the casual user, one who is especially into buying off iTunes, will love this thing (assuming they can afford it). I have to say after trying the N800's built-in Rhapsody client and 30-day trial subscription, it's actually quite slick, and if someone were into the Rhapsody model (pay $15/month for unlimited streaming, pay for each song you actually download) I think the N800 makes a better player. It's obviously better than the Zune, anyway.

But as people keep saying, the N800 isn't just a music player. It's also not just a web browser. It's got Skype. The Flash plugin is slow and somewhat lame, but it works, and you can go straight to YouTube. And there are 3rd party apps. I can connect to any IM service I want with Pidgin. My calendar syncs directly to Google Calendar. There's several ways to listen to podcasts w/o desktop intervention (it's not clear whether the iPod Touch can handle this). And I can build my own apps, which is incredibly geeky of me, but there you go.

Sure, for the casual US user, the iPod Touch may be the way to go. (How much market penetration does the N800 really have in the US anyway?) But the N800 still has way more capability and potential, especially if Apple continues to close off 3rd party development.