We have four of the iPhone 4's (needed to keep up with the Joneses at the local high school). So far, really happy. iTunes gift cards keep the kids' purchases to a manageable level. I think iTunes is orders of magnitude easier that the POC media player; among other things, it knows that audiobooks come on multiple disks and plays them in disk/track order, instead of track order (disk 1 track 1, disk 2 track 2, disk 3 track 1, etc.). So if you burn your own, you don't need 32 unique albums to play a book in order. Battery life is okay, usually at least a full day before it shuts itself down.
It is inconvenient that it doesn't multitask; following a link from the stock quotes loses the stock application. OTOH, I can be certain there's nothing running in the background, running up 3G charges if I move out of wi-fi range (not a concern with this) or running down the battery.
I have to agree that 8 GB seems small; I have 16 and I'm running out of room.