Lots of other people have written about it (including psu, one of the the smarties over at Tea Leaves) so I won't go into much technical detail.
But: wow, is this thing small. How small? This is it next to a normal coffee cup:
It's also extremely light. But it's not cheap-plastic light -- there's a very satisfying click when you slide off the endcap to plug it in to your USB port. It's even better when you slide it back on.
The off-play-shuffle switch on the back has a similarly good feel -- it's not too easy to slide from one to the other which means it should be tough to do accidentally.
The capacity is fine for me. I tend to listen to the same stuff all the time anyway and I can pack quite a bit in 512 MB.
The only think I don't like is the earbuds. I'm not sure how people wear them for hours at a time, they just make my ears sore after a while. Is this something you get used to or are my ears shaped weird? Do I just need to build up some sort of ear calluses? We'll see...