Aesthetically, the iPod is brilliant. Based on the pictures, I expected it to be unbroken white plastic all the way around, as if it were an i(ce)Book that didn't have to open. Granted, that's not really possible, but I wasn't thinking about it that much.
And while the white pod of plastic I imagined would have been cool, the iPod's actual exterior is even cooler than that. The pictures didn't make it clear, but the back half of the iPod is actually metal, while the front half is the white plastic. The metal back features an etched Apple logo and the iPod name, and etched at the bottom is the fine print. The metal is a beautiful solid smooth hunk, but it really attracts finger prints and I've already got several tiny scratches in it. (It's probably stainless steel or some close relative)
The front plastic is equally nice, and was molded out of a single piece piece of plastic so that there are no breaks on the face of the unit where the display is. In fact, the only break on the front of the unit is for the circular control pad. Looking at the side of the plastic, you can see that the bottom 3/4 is cloudy white, while the top 1/4 is transparent. Looking at the face of the unit, there is a strip of transparency all the way around the edge of the unit, in addition to the blank spot for the display. Thankfully, the plastic doesn't seem as scratch prone as the plastic on the i(ce)Book, even though they look to be about the same.
The edge around the front of the unit is a sleek sharp plastic corner, while all the other edges are nice and rounded. The sharp edge is not a negative, and works well as part of the style of the thing.
As beautiful as it is, I'm going to be getting one of these leather cases (LINK ME) to avoid scratches and fingerprints.
The whole thing is held together without any screws. The plastic apparently plugs down into the metal, and it just oozes style. However, the plastic face on my unit isn't firmly in place, and I can push it back and force just a hair. It's not really a big deal, because it's not loose and it only happens when I try to make it happen. 
The size is perfect, and, as advertised, is the size of a deck of cards. Mind you, that's the size of the small cheap cards you get from gift shops, not larger Casino-size cards. In the case of cards, I can't stand the smaller kind, but in the case of the iPod, the size is perfect. Once I get my belt case, it'll fit perfectly on my belt.
The iPod easily is one of the best bits of industrial design I've ever seen.
Along the top of the unit the firewire plug, the headphone jack, and the "Hold" switch are set into plastic which dips down into the metal half of the case. Unfortunately, the headphones are in the center of the unit, and my headphone jack has an L-shape, so that the plug ends up hanging over the hold switch, which is really obnoxious (Of course, Apple's headphones probably had a straight jack).
The hold switch itself is my least favorite part of the whole unit. It's very necessary, but unfortunately, "hold" is towards the middle, while "no-hold" is towards the outside. Because the only grip on the switch is a tiny raised on the edge closer to the middle, and because of the aforementioned headphone L-jack problem, this means that it usually takes me a lot of effort to get hold turned off so I can pause the music or turn the volume down. I really wished they had 1. put the grip on the switch on the outside edge, or 2. made "out" hold and "in" no-hold, or 3. put the headphone jack on the corner and put the firewire jack in the middle. Any one of these three would have made it easier to turn hold off, and the existing arrangement doesn't exactly offer anything over any of those three alternatives.
Um, it plays music, and it plays music well.
The circular control pad has five buttons and a wheel, and will probably be copied by other players very soon. The buttons are Play/Pause, Forward, Backward, Menu, and the button at the center of the wheel is used to make selections. The wheel is surprisingly loose, and doesn't actually have notches -- it's just a freespinning wheel that's used to do any kind of on screen manipulation. By default, spinning the wheel makes a little clicky noise, but stupidly, the clicky noise is made externally instead of in the headphones. Not only does this irritate people around you, but it also means that they had to bother to include a tiny basic speaker in there.
The display is gigantic compared to the display of my Rio, and it's very clear and easy to read. When a song is playing, it displays the name of the song, the artist, and the album. Each one gets its own row, and the text scrolls if necessary, but that doesn't happen until about 25 characters. But it displays so much more than that on this screen as well: In the top left corner are the play/pause/hold status icons, and then the name of the current playlist, and then the battery display. On the next line is what song this is of the total songs in the current list (ie "54 of 1609"), and shuffle and repeat indicators. A subtle, but irritating, point is that the shuffle/repeat icons are in a different order in iTunes than they are on the iPod. And finally, along the bottom of the display is a time left/time remaining display and a graphical display of how much progress has been made in the song! In other words, everything you could possibly want to know about the song is clearly available at a glance.
It's so clear, in fact, that it's made me a little self conscious about people glancing over my shoulder and being able to see what I'm listening to.
The basic interface is entirely hierarchical. The wheel makes a selection, the select button takes you a level deeper or makes the selection, and the menu button takes you back up a level. At the top level is Playlists (which takes you to any playlists which you defined in iTunes, and is a great way of grouping your music), Artists (Allows you to browse your music by artist, and below that by album, much like the "Browse" mode in iTunes), Songs (A big long list of every song on the iPod), Settings (duh), About (also duh), and (when something is playing) Now Playing (takes you to the display screen of the current song, which will also pop up if you don't press anything for about 5 seconds). The iPod actually remembers what menu you were last in, so if the display screen pops up, hitting menu will take you right back to where you were, even after hours of not touching it. When you scroll up and down the hierarchy, the screens actually slide on and off of the display, which is very cool. Unfortunately, from time to time this has really sputtered and coughed in an unpretty way, but it's pretty rare.
Not only does each button do its thing when you press it once, but each button also has a function when you hold it down. Holding down forward or backward will seek within the current song, holding down play/pause will put the unit to sleep, and holding down menu will activate the insanely powerful white backlight. And holding down the select button on the "About" screen will take you to the Breakout game.
The interface with iTunes is also pretty slick, even though I've got more music than my iPod can hold. The iPod settings dialogue allows me to select which iTunes playlists I want synchronized over to my iPod when I plug it in, and when I plug the iPod in, it checks for any changes and selectively updates the contents of the iPod as necessary. If a few files were deleted from the playlist and a few more added, it just copies over the new files and doesn't waste time re-copying all the files already on the iPod. In addition to making nice clumps of songs to copy to the iPod, I can navigate the playlists on the iPod to selectively listen to my music. The interface could be refined ever so slightly in subtle ways, but 98% of the iTunes/iPod interaction is simply flawless. Most of the alterations I'd make just have to do with displaying a little more information in certain places to streamline the process building and selecting playlists to put onto the iPod.
If only a small percentage of mac users used iTunes, then the iPod would be a difficult sell. My Rio came with custom Windows software for managing playlists and copying music to the Rio and burning music, etc, that was simply awful, and was a negative point that many reviewers of the Rio frequently mentioned. But because most mac users listen to their music with iTunes and like iTunes, iTunes integration is a huge selling point for Apple. And I couldn't be happy about the integration.
Transfer time is fantastic, and it only took 20 minutes to transfer 1574 songs to my iPod. It'd be kind of nice if iTunes displayed an "Estimated Time Remaining" while this was happening, but that falls into the "wanting more information" clause I mentioned above. When the transfer is happening I keep worrying that I'm wasting the battery life of my poor iPod after bad experiences with my digital camera and my old Rio, but then I remember the little Firewire trick Apple pulled, so that the unit is able to charge off of Firewire's power. On that topic, the power brick is also pretty cool, and is very tiny.
By default the iPod doesn't function as a hard disk, but that allows you to freely plug in and unplug the iPod without worrying about mounting and unmounting it. To turn on hard disk mode, there's an option in the the iPod preferences in iTunes, and once you flip that switch, the iPod pops up on your desktop once you plug it in. Files copy to it just as quickly as a disk as songs copy to it in iTunes, and it's a very nice little bonus feature.
Though it's advertised as holding 5 gigs, the about screen shows me that it's only 4.6 gigs formatted. It's a good thing they also advertise it as holding 1000 songs, because most people will be happy when it holds more than that because their mp3s are encoded at 128 kbps. All of my mp3s are at 128 kbps, and my iPod currently has 1574 songs on it with 62.9 megs still available. I'm amused that while 62.9 megs is exactly as much as my Rio held, I wasn't particularly worried about filling up that space when I was picking out songs to put on the iPod. "Eh, I've already got exponentially songs more than my Rio held..."
The battery life is great, and as long as I charge it nightly there won't be a problem. I've been listening to it constantly for the last 7 hours, and it's still at 2 bars (of 4), which seems better than advertised. My only real complaint here is I don't like having battery life indicated by bars, and I'd prefer a percentage. But such is life.
Speaking of battery life, it might seem a little silly that I listen to my iPod while riding the train even though I'm using my laptop with all of my music on it at the same time. But it's not as silly as it sounds: I can get up and walk around and still have my music. I can do something else and not have to have my laptop out. And most importantly, my battery life on my laptop has been about 10% better than it normally is when I listen to music on the whole train ride on my laptop, and that's a better reason than any, especially when Apple's new laptops aren't dual-battery capable.
Really, the iPod is orders of magnitude than my Rio at being a portable music player, and in the end is only $100 more expensive than my Rio and the Smart Media expansion were. There are little imperfections in the interface here and there, but on the whole, it's simply the best portable mp3 player there is.
And on top of everything else, the box is one of the coolest boxes I've ever opened, and it was obviously designed by the same team that designed the iPod itself.
(I focused this review on the iPod does, not what I wish it did, because that's not fair. I'll write a follow-up piece about what I wish the iPod/iTunes dynamic duo did later.)