Resistive screen not so bad
I have the original N770, with resistive screen.
Comparing it to my iPod Touch, with capacitive screen I'd say that it's nice to have a touch screen that you can use properly with a stylus. The iPod touch screen doesn't recognise anything that isn't a fat finger; there is no resolution at all e.g. selecting where the cursor should go in text is a pain.
With the N770 screen, it works great with the stylus; especially for typing on a small on-screen keyboard so you can actually see the text you've typed, or for drawing / writing. It also works just fine with a finger too, either for browsing with the same flick action for scrolling, selecting items and doesn´t do a bad job with the on-screen keyboard either.
As for multi-touch, there is nothing preventing the design of resistive multi-touch; both technologies are array based, the same techniques work for both. It just requires development of the driver electroncis and software.
I'd say that the screen is the bit that Nokia got right with the N770. It was a little slow, but mainly let down by very poor app support and appaling customer support.