Looks wonderful. It's been obvious for years that capacitance touch-screens, finger-based input, and multitouch are where it's at; I'm glad to see Microsoft switch.
The interface is slick... I really like how the category panels are wider than the phone's screen and slide across (will make the GUI translate well to devices with different form factors). XBox integration will be a boon for it too.
What about the business side of things? Will it run Windows Mobile / Pocket PC apps? (either natively or emulated like Palm's WebOS devices)
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HP 48s, 200lx, USR Pilot 1k, Palm 3, V, M100, Handspring Visor, Sony N610c, T615c, T655c, HP iPAQ 1910, 2215, Palm T3, HP hx4705, Dell X50v, HP rx1955, Apple iPhone, 3G, 3GS, 4, Samsung Galaxy Nexus
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