Mags gave me a 5G iPod for Christmas. It's phenomenal. I downloaded a few episodes of Lost before we left and watched one on the plane. The first thing I was struck by - it really didn't matter much that the screen is only yay big. Hold it a little closer to your mug, and voila - it takes up about the same portion of your field of vision as a big old TV across a living room.
This compels me to temper the scornful remark I made in [inside] magazine way back when I was ragging on the term (and concept behind) "m-commerce." Although mobile-device commerce remains a fantasy in the US, a small screen can work wonders, imbued with sufficient resolution and color.