Oh My God... I just realized why I need one of these. Imagine being able to take it on a long flight and put two or three movies on it rather than having to lug around the comparatively large portable DVD player!
For sure.... But judging by their prices on the other stuff (20GB MP3 player @ 249 pound), I can't see how you could justify it at the price. Especially with the PSP on the market. You could get one of those, plus a couple extra memory modules for what I'd expect that little media-only player to go for.
It's cool, but what I think they should do is take the guts out, and make a C64DTV in a Gameboy form-factor with that nice looking display. ;-)