Speaking from personal experience on my part, you won't be happy with it for on-location photo storage.
I could ignore the snail-like transfer speed if I was able to transfer a lot of images to the iPod. What I couldn't ignore was that the iPod's internal battery would run out after transferring the contents of a little more than two 512MB CF cards. To say that the performance was pathetic is an understatement.
Also, unless Apple came out with a major update for the iPod Photo that I'm unaware of, you won't be able to review the images you offload to the iPod Photo.
Until some company makes a image transfer adapter for the iPod that also provides power to the iPod at the same time, using an iPod as a portable image bank will be limited. As far as I'm aware of, there isn't A SINGLE ADAPTER out there that'll power the iPod at the same time as it transfers camera data to it.