I bought one of these in November 2008 (it is January 2009 as I write this) as a relatively inexpensive portable place to "dump" all my music. In other words, the 120GB capacity was the attraction. But what a surprise - iPod turns out to be a really great little device! So far, I have about 12000 songs on mine, and a few full-length movies, and I still have 36GB free. That's about 38 days' worth of continuous music, plus movies.
The user interface is very easy to use, and remarkably intuitive. Coverflow can be a little slow to get started, if you have a lot of music, and it's not as useful as it looks. The little colour screen is actually quite good for viewing movies. Of the three games incldued, the music trivia quiz is the best. It uses your own music (and the tag info in them) to form multiple choice questions. If you take the trouble to keep your tags reasonably accurate, and you find out the right cover artwork files (which I have) the quiz is very good indeed. basically, the better your music collection, the better the quiz is.
Anyway, games aside (they are a minor matter) the playback quality is excellent. I didn't bother with the cheapo headphones, and bought some Sennheiser headphones. The sound quality is now excellent.
Movies: It is possible to rip DVDs to play on iPod, by converting them to MP4 format. This takes about 2 hours and you need to hunt down some (free) software on the web to do it. The resulting playback quality is surprisingly good.
If anything lets iPod down, it is the iTunes software that is used to manage it. It is just a bit slow - slow to load, slow to respond to commands, slow to shutdown, slow to detect iPod... And for something so heavily reliant on MP3 tags for its music database, it has really poor tag editing tools.
All in all, this iPod is great value for money. If it died on me, I would immediately buy another one.