They note that the processor has been updated from the lackluster TI OMAP 3430 to a Snapdragon (presumably 1GHz) and that this device probably won't make it to production, for obvious reasons.
Their impressions? Very positive noting
As you can see in the video below everything is running smoothly with no sign of lag or stuttering and everything was functional on the handset (GPS, data, and even camera). It’s the smoothies mobile experience I have ever witness (on par with the iPhone) and it definitely feels a lot better when used on a real handset compared to the desktop emulator.
That seems to be the consensus lately on anyone who gets to play with one of these prototypes, which is a great sign considering finalized hardware and software is still months away.
Also, the video game 'Twin Blades' by Press Star Studio was shown off. The game is currently available on Xbox Live Arcade (400 points) and was ported in under 2 weeks by one programmer. It's already fully integrated with Xbox including achievements and this will be available when WP7 launches. Sweet--going to download to XBox right now.
Both videos after the jump.