The software keyboard lags too much though under a slight load on the memory. Otherwise, it'd probably be much better of a device. I liked my Touch the first month I had it, but only because it was the "new" thing. It was sleek, faster than my Mogul, and had a flush screen. But after that, the shortcomings of it became too large to ignore.
I think it's all dependent on what type of user you are. For one, I have large hands, so a larger device actually makes sense for me. I also rarely use my device as a phone. I'm constantly using it for e-mails and texting more than anything, so not having a hardware keyboard is pretty bad for me.
I think they built the Touch with less quality than the Mogul, too. I dropped my Mogul pretty hard once and never had a problem with it. I dropped my Touch half as hard once and it started to come apart and lost functionality. The screen has developed dark splotches on it, the charger only works when you bend the metal on the USB plug in so it stays in the phone tightly, and recently it started calling people when I'm not pressing anything, lol.
I just can't wait for the Touch Pro.