^Yes, it's Skype and other custom made apps for VOIP on the iTouch and the iPhone. Allows people to use other services besides AT&T which isn't necessarily a bad thing.
iTunes does suck in the Windows environment but to me that isn't a deal breaker. I only sync about once/month anyway after the initial setup so it's not really an issue.
I think it's the variety of apps and ease of use that makes it desirable.
And there is literally an app for anything. Police scanner, level, maps, GPS, games, web apps, tape measure (iPhone only)..and on and on.
www.greatipodexchange.com is a decent place to buy a used 8GB model for under $150. They rate the trade-ins as good and excellent. And www.macmall.com is probably the best place to buy a new one.