I had an iPod Touch 1st Generation before and I wanted to just write a comparison of the 2.

Positives of the 2nd Gen iPod Touch (in regard to the 1st Gen)
-Faster processor. It works better with the games.
-Warmer screen
-Better battery
-Speaker
-Thinner and more comfortable to hold
-Hardware volume buttons (makes it easier to reach into your pocket and change volume)
-Smoother shape (the 1st gen had almost sharp edges)
-Works with the Nike+ shoes with no adapters

Negatives of the 2nd Gen iPod Touch
-Speaker is poor quality
-Does not work/charge with certain accessories or a FireWire sync cable
-Some may consider the warmer screen a downgrade compared to the brighter 1st gen

Positives of all iPod Touch units (including 1st gen)
-Works as a planner, internet device, mp3 player, video player, video game platform, etc. Basically a mini computer.
-Multi touch display allows for easy browsing and typing
-Large screen perfect for watching videos
-Thin and sleek designs make it easy to put in your pocket or purse
-Tilt sensor keeps screen in a position that is easy to read

Negatives of the iPod Touch units
-Does not work with many accessories especially ones that would take control of the iPod (like an iPod ready car stereo)
-Not able to use as a portable hard drive like previous models
-Limited to Apple propriety formats (although iTunes will convert it for you)
-Somewhat large (tall). This may make it hard to use while running or doing other physically demanding things
-No bluetooth yet. (the 2nd gen model should get the bluetooth enabled with the 3.0 patch)
-Shiny back gets scratched easily.
-Not available in large capacities.

Overall I think this is one of the best MP3 players out there. The iTunes program used to sync it really works well. I would recommend this to anyone looking to buy a new or used MP3 player.