Besides discussing amateur content for the iPod, Mimi Ito also points out the more private uses of handheld video

On the other hand, I think it might be worth considering more settings for activity in which palm-sized video might be a plus. You mention ambient video while you work at your desk. Curling up with a small screen in bed, or having very private content viewed in private spaces (let your imagination go wild) are also possibilities for the handheld screen that differentiates it from the TV or PC screen. Some anectodotal things I've heard about mobile phone video suggests that the privacy dimensions of handheld video may be as important as the mobile and portable dimensions.

Mimi Ito commenting Kazys Varnelis iPod Review