It's a nifty device. As ebrown mentioned, it's fun not only for music, but also for podcasts and movies.
The wi-fi functionality and location services work remarkably well, and in a city you should be easily able to pick up an open wireless signal and access the internet, check your mails or use Google maps.
The touchscreen interface and the tilt sensor are very nifty technologies, and they alone offer an amazing range of possibilities for developers of third party programs.
If you're getting a 2nd generation iPod Touch, you'll also have a good chance of using it as a voip phone by installing skype on the iPod, as the 2nd generation comes with external speakers and a microphone. Which means that you'd be able to make and receive calls from your iPod Touch for free.
There are thousands of 'apps' online in the iTunes store, and many useful apps are available for free.