Before you browse your photos, you also get the option to erase the camera's media card. Your photos will show up as Roll #x, which behaves just like any album so that you can view photos optimized for the iPod Photo. Unfortunately, the process of getting photos off the iPod and onto your computer isn't automatic; AutoSync is still reserved for music only. Instead, you'll have to open up iPhoto or another iPod-compatible photo application and manually transfer photos. iPhoto will add your roll and create an additional optimized-for-TV version, which is then sent back over to the iPod.
Some folks will argue that their 256MB or even 1GB memory card is more than enough storage to last several days without the need for transfers. Others will contend that the iPod's 2-inch screen is not much larger than the typical digital camera's and that you can still output to a TV for big-screen previews--so why not spend your $29 on an extra 256MB media card? All valid points, but we think it's worth $29 to be able to empty your card and view photos in an intuitive, musical, and battery-safe environment.