I have the iPod Touch and the video and sound quality are great on it. The new ones (this "generation") finally have a speaker in them so you're not tied to the headphones if you'd rather.
I've downloaded a couple Squidbillies episodes and they played wonderfully, plus you can surf the interwebs wherever you go that has Wi-Fi. The new app store is full of nifty games and such as well.
Hope I helped.
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Universal Truth Is Not Measured In Mass Appeal
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