Pros: Superior sound and build quality
Cons: UI features
Having had a chance to play around with the Colorfly C4 for a little over a week now, I have to say I am quite impressed. I also own the Hifiman801 unit so I've been doing some comparing of these two as well.
Let me just say, up front, my biases are towards sound quality over user interface and drag-and-drop file ease over being tethered to any software requirements. Really, for me, if the sound quality is spectacular I can almost live with a command line prompt for a user interface and I've already spend about half of my adult life waiting for software interfaces to load songs (incorrectly, often), so I'll add them myself, thank you very much.
Furthermore, am I an audiophile? Can't say, I guess - but I do highly value well reproduced music and get tremendous satisfaction discovering previously 'hidden' musical nuances in songs. In this quest I have tried the ipod (briefly), the Zune (even more briefly, after experiencing their user 'interface'), a Sansa,the Ibiza (I know, seriously?), several Cowon products, as well as the more recent HiSound Studio and the HiFiman.
I currently use Sennheiser HD800s for home listening and JA-16 IEMs for moving about.
I have to say I am very impressed with the Colorfly unit; both in terms of sound quality and build quality. Compared to the HifiMan801, I feel the low end is more pronounced on the Colorfly (but not unnaturally so, just better), and the output power is certainly greater - able to easily drive the HD800s to an enjoyable level. I am not a huge fan of heavy bass (I don't have a trunk full of sub-woofers in my car, for example), but I do want it to be on equal par with the high and mid end of the spectrum and I think the Colorfly accomplishes this balance well. I have also made some 'new' musical discoveries on some of my favorite 'test' songs that I had not noticed when playing them on the HM801.
In addition, I've had some 'freezing' issues with the HM801 with songs that should play fine, requiring a hard restart to bring back to life; but I have yet to have one 'freeze' with the Colorfly unit. The user interface, though not spectacular, is certainly usable and on par with that of the HM801. I actually kind of like the unique interface design Colorfly has gone with; its fun to watch, and fits very well with the overall style of the unit.
As others have said, there is no gapless play, it won't do FLAC at 24/192 (but does WAV at this level) and there are a few 'clicks and pops' sometimes switching from one song to the next and/or upon unit on/off; but during song play it is perfectly quiet except for the tunes themselves and the 'clicks and pops' are not loud by any means, it's just that there isn't always complete silence between songs. Also the 'built in' EQ settings probably won't be used much, but the upscaling really does work well, particularly when I want to quickly load a batch of MP3 rather than going back and ripping them to FLAC or WAV.
Anyway, for me, this has quickly become me 'go to' unit for portable, quality musical enjoyment without additional amplification, etc. Its a great unit.