I thought I'd weigh in with my experiences since I've gone through the whole "ipod vs. axim" debate as well. It's really a bit of a long story...
First, I've had iPods since the original (5gig with actual scrolling wheel). I always loved them. This summer, I got a Dell Axim x50v (the VGA version). It's a great little device; it keeps me organized and I'm also able to check my email and go online with it. It's really a joy to use, and I'm always able to find cool new programs/functions for it (check out
http://www.aximsite.com).
Anyways, I started to get tired of carrying so much stuff in my pockets. I'd carry my Axim in one of my pockets, and in my other pocket my cell phone and my keys. Then, when I'm walking, I'd have my iPod going too...just too much electronic stuff. I decided to sell my iPod, and buy a 1gig SD card for the Axim, and play music from it.
Right now, I use my Axim as my do-it-all device. I use a program called gsplayer (skinned to look like itunes), and I have a set of retractable headphones that I keep in my bag. When I want to listen to music, I pull out the headphones and listen away. With the 1gig card, the Axim only holds around 200 songs (I just sync my top 200 songs from itunes using an awesome program called synctunes).
It's nice, because I have less devices, and I haven't really longed for my iPod since. Sometimes, I want to hear a song and it's not there, but it's not that devastating. A couple cautions though: First, the axim's battery life is not great. Second, using the Axim for music is definitely not it's strong suit (keeping music organized and such isn't anywhere close to as easy).
If we're talking about music playback, the iPod wins, hands down. The Axim can just do so much more, and I was willing to give up a bit of musical convenience for the ability to use my electronic device for so much more.
Having said that, I recently bought my girlfriend one of the new iPods with video, and I'm pretty damn excited to get it. I've found myself to be really excited about the new iPod, and I think that the coolness of the iPod is untouchable.
Now, as far as video goes, I really can't comment yet (haven't received the iPod yet). I can tell you that video is pretty awesome on the Axim though. 2 big pluses with the Axim: 1) Bigger screen. 2) Able to play more types of format (divx, etc).
I hope this helps in your decision. Basically, I think you just need to decide what you want to use this device for. If it's more than just music and video, than the axim is probably the winner. If it's just music and video, the iPod probably gives it a good run. I can keep in contact with you, and tell you more about the iPod vs. Axim comparison when the iPod arrives.
Let me know if you have any questions about the Axim; I'm happy to help. I remember being faced with the same decision, and it was tough.
BTW, if you're planning on using a microdrive with the Axim, you'll probably notice even less battery life. You can get SD and CF cards from pretty cheap though. Also, the new Axims can be had for quite cheap if you buy them at the right times (I got mine for $260 with a spare battery and 2 year warranty).
Okay, all the best with your decision.
Cheers
Roger