As I now have an iPod that can play video, I though I would try out the iTunes Movie Rentals service.
I must say I am very impressed on the quality through both PC and 32"LCD 1080P TV!
I also purchased a film, "The Naked Gun 33 & 1/3" and it is excellent all around, and the price for rentals and purchases is reasonable.
Overall I am impressed with my Touch, its much more responsive than my Nano 2nd Gen too.