Our iPod Touch came with 16GB flash storage, a 3.5" 480x320 LCD like the one found on the iPhone, WiFi, a 3.5mm audio jack, a dock connector and a built-in battery. On the box it came with we found the Touch, the classic Apple white earphones, a USB 2.0 cable, a polishing cloth, a stand and a quick start guide. Curiously, there was not iTunes CD.
The first thing we noticed on the Touch is how thin it was. While width and height are very similar to the iPhone, it is only half its thickness. Another difference is that the edges of the Touch are pretty sharp, while on the iPhone are round and soft. The device only has a standby/on/off button on the top, and a single button on the bottom. All operations on the Touch are carried through its touchscreen. There is a small inconvenience regarding the brightness of the touchscreen. I personally set it to about 20%, in order to save battery life, but each time the Touch (or the iPhone) turns on, their screens will have a different brightness level. It's never consistent.
The user interface and operating system is very similar to the one found on the iPhone and a joy to use. It comes with a Safari web browser (user agent: Mozilla/5.0 (iPod; U; CPU like Mac OS X; en) AppleWebKit/420.1 (KHTML, like Gecko) Version/3.0 Mobile/3B48b Safari/419.3), the special YouTube client, Calendar, Contacts, Clock, Calculator, the iPod A/V application, photo viewing, Settings and an iTunes purchase application. Personally, I think that the "Notes" application should have been there too, if not most of the iPhone applications. Segmentation makes market sense, but not common sense.
The iTunes application is pretty nifty, you can search for your favorite artist, find songs you like, preview them for 30 seconds via WiFi, and then decide if you want to purchase them or not. An interesting thing to note here is that the first time you sync your Touch with iTunes (manually or automatically), iTunes will log you in to the iTunes Store on the Touch too, although a password confirmation is needed to purchase new songs.
Now, to the juice of the Touch: the multimedia. The Touch can playback AAC, mp3, Audible, Apple lossless, AIFF and WAV. Regarding video support it can do h.264 up to 1.5mbps at the VGA resolution and plain mpeg-4 simple profile up to 2.5mbps. Container video formats supported are .m4v, .mp4 and .mov. Personally, I would welcome WMA, WMV9 and XViD support on the Touch, but hell will freeze over before Apple adds support for these formats.
The iPod application itself is amazing. It is all finger-based, it allows for playlists, sort by album or song or artist and more. Using the touchscreen the user can fast forward, shuffle, repeat, play/pause, change the volume, rate and of course use the impressive coverflow. If there's one smart playlist or ability that I am missing is to be able to sort by rating. The video application is great too, it allows for smart stretch or true 16:9 playback. There was never any performance hiccup that I noticed.
Audio quality was top notch, and we didn't have to use the audio jack adapter that Puremobile also sent us. The iPod Touch comes with a reachable audio jack that the vast majority of headphones support. The adapter is still useful for the iPhone though.
The battery life is remarkable in this little gadget. We measured 20 hours of music, 4.5 hours with video. Charging is pretty fast anyway, so battery life is not an issue.
Overall, I believe that the Touch is the best iPod ever. And with the upcoming addition of native third party applications in February, it is bound to become a very useful gadget. Personally, I am in favor of a single device that does it all, so I still have my eyes open for a new iPhone model that fulfills my needs.