Its not bad. It has a big, high res screen that's good for videos. Also, thanks to the tilting screen, you can set it on a desk/table and easily watch video. The standard Windows Media Player included has a pretty sub par interface, but the one that's a part of HTC Sense is actually pretty decent (although I forget if this is included...you might need a custom ROM with Sense 2.5 to get the better player). One definite plus is that it can play Zune Pass music, too.
I wouldn't put it at iPhone level here, no, but its actually pretty solid. Having used it for a month or so, and having owned quite a few Android phones, I would put it a step ahead of Android in this regard, at any rate.