I too have joined the cult… the cult of iPod that is. On Saturday I purchased a silver 1st-generation 4GB iPod mini from MacSuperstore here in SLO. With the release of the 2nd-generation minis, retailers (including Amazon) are liquidating their stock of 1st-generation units. I got mine for $179.
I looked hard at the iPod Shuffle as a replacement for my USB keychain drive. But with the 1GB model priced at $149, the 4GB mini is just $30 more for a much more capable device… so I went with the mini.
Note: the primary improvement on the 2nd-gen mini is battery life: an improvement from ~8 hrs. to ~18 hrs. This is a major improvement, but I don’t believe that the shorter battery life of the 1st-gen will be a major issue for my situation.
The challenge now of course is to not piss away a bunch of money on accessories for it! 
Now you have to pay iTunes a buck a song to fill up your iPod (if you do it the way Apple wants you to)
Fortunately, iTunes does a good job of ripping CDs (to either mp3 or aac) as well. I have bought a few tunes from the iTunes music store, but used CDs are generally a better bet.