Have had one for almost two years now and love it. I used to carry two huge cd cases in my car to handle all of my cds. Now with the iPod I have put 900+ songs on it. I can hook it up directly to my car's cd player via male-male audio jack and aux input on my headunit. And I can hook it up to my computer to play through iTunes, which I do daily while I sit and do my college work.
I don't know which generation mine is. I never paid attention to that. It has the click wheel thing though and no color screen. Also 40gig's of space with not even 4gig's taken up with 900+ songs. PLENTY of room.
I have gotten a few scares out of it though. A few months ago it kept skipping real bad. Sometimes it would just stop playing altogether. I thought maybe the battery was just going dead completely. Turned out I just put a corrupted mp3 on it though. So once I cleared that out it was back to smooth sailing.
Downfalls of an iPod? Well for me, the included headphones are junk and hurt my ears. I tossed them away almost instantly. Also the screen can get scratched really easily. My way around this is to find some super clear tape about 2 inches wide to cover the entire screen. It looks a little tacky where the edges of the tape are coming up, but it saves the screen.
You've probably heard stories about the batteries not lasting. I dunno about anyone else but mine is still going, and still rechargeable after nearly 2 years. And when it does die I'm just going to follow this
http://www.ipodbattery.com/slimipodinstall.htm to do my own replacement instead of the expensive shipping back to Apple for a replacement iPod method.