I'm happy with my iPhone. 8G is really constraining, but I only listen to on it when traveling or spending a lot of time waiting with not much else to do. If it were a primary source, then I'd need 80 or 160G. As a secondary source it's easy enough to only carry the albums that I'm listening to the most lately.
BTW, the iPhone is also great as a PDA, secondary camera, photo album, alarm clock, browser and, oh yeah, phone. It's more than looks. It blows my old Blackberrys into the weeds, now that IT figured out how to tie into the Exchange server. Steve Jobs is still a pain in the butt in the way he tries to control usage, but this product does work. It's more than image.
Dave