There are enough fanboys on Mouthshut who would tell you how amazing the i touch is so I will refrain rather let me just stack up the competition
In the PMP market (portable media player) the major players available in India are from Apple, Cowon, and Samsung
The Cowon DS+ (google it) is a pretty sweet player, better audio than i touch and the screen too is quite nice
The Samsung YP2 and the newer YP3 (google it) are above average players, support touch interface and have nice enough screens
If you are looking at using your PMP ONLY for videos and music then Cowon is a pretty good choice. Mind you it isnt cheap..its at par with the itouch. The Samsungs are quite sluggish but a little cheaper.
But if you intend to use the PMP for any thing else the i touch wins hands down. The i touch has Safari browser built in which is easily the first truly portable fully functional browser out there
The Appstore has close to 65000 apps which would work on an itouch. Though most of them are junk, there are still easily close to a couple of thousand apps/games that can help you kill time and/or make your life easier
The multi touch interface is one of a kind and dont wait for anybody else to copy it....it is patented by Apple
If you are a virgin to capacitive touch devices then the wow factor would last for months to come as the difference between using a stylus and using ones fingers is phenomenal.
The sound quality is well above average though the earphones apple ships are junk. Go in for a pair of Creatives/ Sennheisers to really enjoy your media
The build quality is fantastic and the i touch looks its price. The form factor is excellent and the player is marginally thicker than the nano
Update 9th June: Suggestion would be NOT to buy an i touch now, Apple should be releasing i touch 4G in September.
Of course you have to use i tunes and you cant use the i touch as a flash drive..if you are tech savvy you can bypass these issues but for most this the just something one has to bear with.
Apple will try to squeeze money whenever they get a chance through software updates.
Thats annoying but a price one should be willing to pay for the fun the i touch can offer(Updating i touch firmware is not mandatory). Also converting videos into H263 or mp4 format readable by itouch can be a hassle, but one gets used to it
Other options
1. i phone - sadly the phone variant is junk, except for the added 3G support, the actual phone functions are below par, specially since us Indians have been spoilt over the years by some fantastic phones
Update 9th June: No longer should comparision be made with this. i-phone has its hands full with 4G competing with Nexus, X10, HTC, androids etc.
2. Sony PSP - This is a serious contender, but a little too big, a little too kiddish. The itouch would never be able to play games as immersive as the PSPs but for everything else the Sony gizmo falls a little short.
Update 9th June: PSP Go variant is crap, try to get hands on a PSP 3000 if you can (if you still want a PSP)
My take-
For the every day guy who wants everything from casual games to music the itouch is hard to beat
Buy Cowon if music and videos is the first priority
Buy PSP is games take precedent over everything else
Price (Rs. 12000/- Oct 2009) ITouch 2G 8 GB
Cheers!
Update: Google Nexus and Motorola Android have hit the market..will compare as soon as I get my hands on them.