a bit biased, eh?
i think it looks pretty good. i don't know the size, but the specs are on par with iPod mini - except the capacity. if this thing is 2 GB but $150-200, it will be a good competition for iPod mini.
the problem is with the scroller. it's just not as efficient as iPod's "scroll dial." that is the brilliance of iPod design - scroll dial interface is far more efficient because it's continuous AND it's acceleration sensitive. scroller is continuous but not as sensitive to acceleration - to make it sensitive, you'd need a loose scroller to let the user spin the scroller fast, but by doing so, it will be too sensitive to small scrolls...
EDIT: size: actually this thing is even lighter than iPod mini. if the price is right, it will be a very good product.
iPod mini: 3.6 x 2.0 x 0.5, 3.6 oz
aiwa: 3.6 x 2.2 x 0.4, 2.4 oz