Hi,
I have a Hero and I have just got a Tattoo for my wife.
My initial views are that they're both great phones
I've had the Hero for a few weeks and it's been very stable and fault free (I upgraded to the new firmware as soon as I got it).
The Tattoo only turned up a few days ago, but I think it's a great little phone (it is quite small compared to the Hero). I find the Tattoo very tactile and far easier to hold than the Hero. The screen is resistive so requires more pressure to use than the Hero (not that this is an issue). Also the dual touch feature of the Hero is not on the Tattoo (to zoom a web page you need to use zoom +/- keys that appear at the bottom on the screen).
Feature wise they seem to be pretty simular, the Tattoo has a radio (the Hero doesn't), I haven't tried it yet. The screen resolution is smaller on the Tattoo, the Tatto's case can be totally changed (good if you scuff it I guess).
Regarding the touch-keyboard, yes it's smaller on the Tattoo but I still find it OK and the same HTC Sense UI is on it.
As to the camera, I don't think it's autofocus on the Tattoo but to be honest I think the camera is pretty-rubbish on the Hero anyway (far worse than my old N95 8Gb). It takes ages to focus and often gives blured shots.
Also regarding the Market Place there doesn't seem to be hardly any applications for the Tattoo yet (I looked for the 20'ish applications that I have on my Hero and almost none of them are available for the Tattoo). I think this is due to the reduced screen resolution and the lack of support for this in the application (here's hoping the various developers address this issue!).
Note that currently the Hero is running 1.5 firmware and the Tatto is running 1.6 (I've heard that 1.6 should be available on the Hero soon though).
If anyone has any specific comparison questions I'll try to answer them.
Cheers Ian