I don't own one, but I've played around with a demo one at one of the recent trade shows and was impressed. The touchscreen is very responsive and sharp. Video playback quality is stellar. You don't even realize you're looking at a screen less than 5". Overall it is quite comparable to an ipod touch. The big advantage it has over Apple (besides price) is file compatibility. You can play just about any file type video or audio on the Archos. You'll want to download and install the Android Market apk onto the device. But that's really easy to do.
Archos has not said anything about an eventual upgrade to 2.3 or 3.0. The 2.2 firmware is out though. Gingerbread just came out the other day so it will take a little while to filter down to devices like this. 2.3 has some cool new features, but really isn't much of an advancement. I would guess that Archos will make some incremental firmware updates possibly to 2.3 but I doubt it will see 3.0. I doubt any manufacturer will upgrade a device out right now running 2.2 all the way up to 3.0 when it comes available. It is much easier for them to start building the next generation of devices on 3.0. The hardware gets better and it's easier to support and keeps them in business.