I bought the 32gb model to replace my 15 month old Ipod Classic and I am reasonably happy with my decision. As others have commented on the pros of this product I will concentrate on what I consider to be the negatives.
Firstly, unlike the IPhone this is not a 'go anywhere' internet device. In my case, from the time I leave home to go work until the time I get home, I am in a grand total of zero WiFi hotspots. Therefore all the Internet based apps, email, social networking etc capability of the Touch is unavailable to me for 12 hours on working days. However, at home it is seriously useful - checking emails on the Touch is so much quicker than starting up my laptop and there are numerous free Apps in the App Store that I use daily.
Secondly, as many have said, battery life is very poor especially when using WiFi or any video function (including playing games). I find that the battery lasts for just 5-6 hours with a combination of music, internet and games. Therefore, buying a separate charger is essential if you are ever going to be away from your computer for a day or two. Chargers for more recent Ipod Classics do work with the Touch so many will already have one that will work.
Thirdly, I have listened to a number of songs on the Classic and then played them using the same headphones and settings on the Touch and, to my ears, my 15 month old Classic has a slightly fuller, richer sound. The difference isn't major, but I am slightly disappointed with this.
Despite these points, I would still recommend the 32gb Touch to anyone who doesn't have a huge music, video and photo collection - the 32gb actually has space for 29gb of digital media. As the 32gb Touch is currently just £30 more than the Classic, the key benefits (larger screen, access to the ITunes App Store, internet access), more than justify the extra cost. However, if my digital media was above the limit for this machine, I would not want to spend an additional £80 for the 64gb version.
Essential accessories for the Touch are a screen protector and a case which I bought at the same time as the Touch - some cases include a screen protector killing two birds with one stone. As usual the earbuds supplied by Apple are awful and most will also want a charger (if you don't already have one that works with the Touch).