Probably going for the 2nd gen. Like I do with my other Apple products around the house (already mentioned in this thread by others), I'll be selling my current products as soon as I replace it with a newer version.
Not because I have the cash every year for a revision, but I'll lose $100-$150 in resale value after that time. I look at it as a built in cost. In essence, I'll be paying $8-$12 a month to get the latest gen, a cost I (and most) are willing to pay.