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I'm currently weighing up the Cooler against the 505 as they can be bought for very similar money.
It looks like the cooler has slightly faster hardware, but the 505 has more flexible input (buttons for menu navigation and so on). I can't see any deal killers in terms of formats supported. As far as display is concerned, it appears that the cooler offers a wider choice of font and size. Both appear to offer a landscape mode. The replacable battery on the Cooler is a big plus.
The weakest point for the Cooler is that it is essentially just an OEM device. That's allowed them to get it to market commendably quickly and cheaply. However, it also means that the firmware is probably pretty much out of Interead's hands and that could be a problem. They need the device to deliver the best possible user experience and to do that, they need the firmware to sing.
By all accounts, Netronix (the OEM) are a hardware company and I think that shows in the UI. For all that you can make something look like an iPod, it's got to have software that makes the most out of the few buttons that the user has to interact with the device. Good user interface design is a black art and there are a very small number of people who have the skill to carry it out. It's not something that you can just read up on (ironically enough). I've been involved in work like this for clients and the subtle difference between 'functional' and 'beautiful' in the hands of a user can require more effort than implementing the main functions of the device.
(As an aside, I think the OpenInkpot effort is going to fall foul of this at some point - they appear to have implemented something that depends on the hardware having particular buttons for the user to press. Porting it to new devices presents the problem not only of mapping different controls, but then making sure that the controls remain logical and effective with a user interface that was designed to work best with a particular configuration).
Already some reviews have mentioned difficult to navigate menus and couter-intuitive controls. Again, these aren't really deal killers - most of the time you just want to turn the page and that's easy - but it makes the difference between an iPod and any of the thousands of other MP3 players that haven't become a household name. Unfortunately I'm not sure Interead have the ability to do much about it, so I suspect the Cool-er is going to be more of a workhorse product than an object of desire.
All of that doesn't really help me make a decision between the Sony and the Cooler.
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