It's nice to know the folks at Forrester Research feel the same way about the iPod photo as I do. They, in fact, isolated the reason why I chose it over the regular one:

The color screen does make the iPod music experience better. Let's face it: Everything looks better in color. And so does the iPod. Text, navigation and album cover art look great and extremely familiar to those used to working on a PC or Mac. The color screen makes menus more readable, photos displayable and the music experience more delightful.