This is a pretty sweet looking Windows Mobile 6 device :)
The HTC Touch is definitely going to be a direct competitor to the iPhone. It is quite thin at 13.9mm and very light at 112g, and I'm guessing they've made a consious decision to keep costs down by leaving out 3G (HSDPA) support (as did Apple with the iPhone) and also only spec'd it with 64MB RAM.
HTC have added a slick customised "3D" user interface on top of WM6 which has 3 different screens for Contacts, Media, and Applications. The user can sweep their finger up the screen to bring up the interface, sweep across the screen to rotate between pages, and sweep down the screen to hide the interface again. These kinds of sweeping interactions will also work in the normal WM6 interface on long lists like your Contacts or your Email/SMS Inbox.
As with other PocketPC type devices, you can also use a stylus with the HTC Touch to allow use of either the onscreen keyboard or hand writing recognition using Transcriber. Personally I never use the onscreen keyboard on my current phone as the Transcriber works perfectly well (except when typing in passwords, I use the keyboard to ensure accuracy). The only thing better would be a sliding QWERTY keyboard.
Check out the HTC Touch site to watch some animations on how the device can be used. There is also 3 x HTC Touch's to be won if you sign up to their mailing list and it seems to be open to quite a few countries!
A few more notes on this device versus the iPhone...
The HTC Touch supports SD 2.0 which means it can support 4GB microSD cards, and 8GB cards have already been previewed by some manufacturers. This standard also supports up to 32GB so in the future it will be able to have a much larger capacity than the fixed capacities of 4GB and 8GB that Apple will initially offer with the iPhone. Upgradability is always a winner in my books.
The big feature for business users is Exchange integration. Windows Mobile has had this for years, letting you sync your Inbox, Contact, Calender, Notes and other types of content with your device. However with Windows Mobile 6 you get new features for reading HTML email, flagging and searching, and with Exchange 2007 you can do remote searching for mail that is not even stored on your phone, as well as push email and more!
On top of that, the huge array of third party applications for Windows Mobile make it a great platform to use. My favourite is probably TCPMP, a media player that supports a huge array of video codecs (including divx/xvid and now even FLV!). Other apps I frequently use include Messenger, PocketMusic and PocketSCUMM (a emulator for those classic LucasArts games. Playing games like The Secret of Monkey Island on your phone is just cool!).
I have to admit I probably won't be lining up to get one of these phones because I'm after 3G, more RAM, a sliding QWERTY keyboard and a higher resolution screen (my current dream phone is a toss up between the Toshiba G900 and the i-mate Ultimate 7150), but if it was a choice between the HTC Touch and the Apple iPhone I'd go for the HTC Touch hands down.
UPDATE: There are a number of vids popping up on YouTube with the HTC Touch in action. I found one which gives you a fairly good idea of how smooth the interface is, even if the reviewer hasn't quite worked out how to sweep his finger across the screen properly :)
And here's another, with marketing hype and all!