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The screen is bigger, it comes with headphones that shouldn't be thrown away right after opening the box and generally it's everything I've wanted in a player. I've heard squawk on the street that I'll be kicking myself for it's battery life but so far so good.
I'm still not using my 8 gig iPod Nano that I bought for $60...right now, it's being used as storage for a bunch of Lost podcasts that I'll probably never get around to listening to. Seeing as how when outside of the home and riding the bus, I'm pretty much only going to work, I do not bring any media players with me on a daily basis. I used to use my minidisc player when working overnights at work, but as most of my media consumption is done at home, my PS3 and PSP suffice for all my downloaded music listening/downloaded video watching needs.
I mostly just use my old iPod to listen to music in my car, and I use my iPhone as my MP3 player. It's pretty convenient to only have to carry one gadget in your pocket, and it's an extremely useful device in a general sense.
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