I've been posting this same message all over the place, because I seem to be one of the only people that have had a chance to compare a Week 37 Touch and a Week 38 Touch side-by-side.
I didn't really notice much negative effect on my Week 37 Touch, and the screen seemed perfectly fine except when pictures or videos had lots of blacks in the frame. The blacks seemed muddy and undefined, but I would definitely not say such pictures or videos were "unwatchable". When the frames were bright and/or colorful, I thought the screen was fantastic. I was perfectly content keeping my Week 37, and I assumed that I was -not- one of the people affected by the bad screen.
I later got a second Touch, Week 38, and compared the two side-by-side. The Week 38 was absolutely a better screen. I returned the Week 37, even though I don't think I ever would have had I not seen the direct comparison. I loaded the same dark picture (http://www.pbase.com/lurchnc/image/81689347) on both Touches and showed the images to the register clerk at the NYC 5th Ave. Apple Store. I was refunded completely right away, without having to pay the restocking fee.
I have a week 37 and all seems fine, there is a little screen issue but I hardly notice it. I doubt I'll return it but I have 29 days remaining to decide