The touch screen is amazingly sensitive without being prone to weird errors. The two-finger zoom interface is lovely. The UI responds instantly, no matter what the phone is doing. I'll write a full review on Tech Talk soon.
But damn, this thing is just begging to be used for games. It would be a far better platform than the current game-enabled iPod, because the input device is more flexible, and Apple does not have to fear metal fatigue in the clickwheel for games that would demand a lot of clicking, more than the wheel was really designed for. Oh, bring me games on my iPhone.