I've had iPods since the inception of the unit (a 5 gig 1g, a 15 gig 3g, and now a 30 gig photo) as my digital music collection blew up in size. I can honestly say that the Photo features of the iPod Photo are really just a gimick... they add very little to the experience (unless you're an art history student... this thing is MUCH better than a deck of flashcards for memorization). It's cool having a shiny color screen, but I was just as happy with the monochrome ones. The only real difference I've found in my usage is the ability to play solitaire, which was sort of tricky on the older monochrome screen.
So why did I get the 30 gig photo? Well, it was only $50 more than the 20 gig, and I would have shot myself later for not spending the extra $50 on 50% more storage. Buying a 20 gig at $300 just doesn't make sense when you can get so much more at such a low price.
Verdict? It's well worth it, IF you have a large music collection (mine's almost entirely apple lossless). Don't justify the purchase on the fancy screen.
EDIT: Don't bank too much on the iPod as a portable hard drive for serious usage for video, etc. The HD is fairly slow compared to similarly priced options that are dedicated HDs. I tend to back up a lot of large Computer Graphics projects on my iPod, and you can certainly play videos etc off of it, but it's noticably slower for applications etc.