I've had this phone for a few weeks now and so far am really pleased with it.
Yes the touchscreen is a bit smaller than most phones, but it costs quite a lot less, and as it is my first touchscreen phone it hasn't really bothered me. The main issue it creates is that it can be a bit fiddly to type on it, but that has got easier with some practice. It seems to work best if you turn it sideways and type with your thumbs onto the QWERTY keyboard, which is what it's designed for really. The predictive text is also aware that you may mash adjacent keys as you type and it accounts for this, so you don't have to worry about 100% accuracy.
The Android operating system is great and works really well. I'd say it's the main plus point for getting this phone. I love how customizable the phone is, and there are loads of apps you can download from the Market to modify it further. I also love having WiFi on it, and this seems to be one of the cheaper phones you can get with that built in.
Some people have complained about the battery life, but it seems fine to me. I don't have WiFi or mobile internet turned on all day, but I do use them quite a lot (you can add a widget to the homescreen to turn them on and off easily), and it only needs charging every other day, which I don't think is unreasonable.
The camera is OK, not great, which is a shame, but I only use that for the occasional snap anyway.
Mine came with a microSD card in the box with it, which didn't seem clear from the product description, so I'm glad I didn't buy one separately.
I would thoroughly recommend this phone as a first touchscreen/WiFi phone. You can't beat it for the price, considering you get all the advantages of an HTC for under two hundred pounds.