I've had this device for 3 weeks or so and used it for 3-4 days before deciding it was not for me. I've had a G1 in the past as well that it also collecting dust.
The interface is nice in Android 2.1 but I don't really understand why they waste CPU resources with stuff like animated wallpapers. Considering the CPU's speed (1GHz!) it's fast but not impressive. I've also recently got an Ipod Touch and could see where most ideas for the Android UI came from
Some of the applications are very nice like maps and the new e-mail client. Unlike 1.6, this version let's you log into several accounts to check e-mail and sync calendars.
Form factor is nice but if I wanted one of these smartphones I'd go with one with a keyboard. Battery life is a joke, as expected from the hardware specs.
My only real interest was doing some 3D programming on it, but OpenGL ES 2.0 is not exposed in Android yet, you need to use the NDK for that. That's not necessarily bad as I think the Dalvik VM is a very bad idea to begin with.
Lack of root access and custom firmware was also a sort of deal breaker for me as well. If I was going to get a phone running Linux I'd go for the Nokia N900.
So, in conclusion, I started porting my 3D engine to the iPod and the N1 is now collecting dust. I honestly don't think it's a very good phone. Very cool gadget though.