It was a little screwy in the beginning and I had to format it, but it's fine now. I have one of the refurbished 30GB ones and it's got all my music, my picture folders (I've still yet to figure out what this is for), some podcasts, and a bunch of youtube videos on it. Software's getting better, but they needlessly overcomplicate and ruin some things.
I can't tell you much about the marketplace since I never use it, but they recently added a lot of good stuff as far as tv shows go. Unfortunately iTunes is still hogging all the good stuff. I've only got about 5000 songs, and if you have your music folder well organized and EVERY SINGLE TAG IN GOOD SHAPE, then you won't have any problems. Unfortunately mine isn't so the software likes to be a dick and hide things, mislabel them if I forget to turn off the tag updater, and just put everything in the wrong place. Now I'm used to its system and know where everything is.