I've done very little with Nitrogen so far, but I've been monitoring the mailing list for months, so I think I have something useful to say about it.
To your concern about the syntax of Erlang and the Nitrogen framework, I'd respond that that sounds like a pure case of unfamiliarity, rather than unsuitability. Objectively, HTML is not a beautiful language, and it has plenty of quirks. You're used to this now, so it doesn't seem so bad. Give Nitrogen/Erlang a chance and you may find that you get used to it soon enough, too.
To your question about comparison to other languages and frameworks, I'd say the biggest difference is that with Nitrogen, the entire web site is being served directly by the Erlang runtime. Ruby on Rails has such a mode, but it's intended only for testing. Many other frameworks don't even offer the option of running everything within a single long-running process.
Running the entire web application and its underlying infrastructure within a single long-running process has significant implications on how the site runs:
With Apache, each child gets killed off every N connections, where N=500 or so, and you can't say whether a given child will always handle all of a given client's requests. Because HTTP is stateless but web apps almost always require some client state, an Apache child must rebuild its view of client state as part of handling a new connection. By default, this means going back to disk for persistent data stored about that client. There are alternatives like memcached, but these aren't built into the core of a LAMP type stack. With Erlang, nothing is killed off periodically, and Erlang offers standard facilities like Mnesia which provide disk-backed in-memory DBs.
Incidentally, if you're familiar with nginx, it's built on the same principles as Erlang, and it's fast for the same reason. The main difference between nginx and an Erlang instance running a web server is that nginx isn't a programming environment, so it still has to delegate a lot of processing to outside code. That means it shares the same IPC and persistent state problems as Apache.
Because the runtime stays up continuously and is a fully-functional programming environment, you can probably build more parts of your system in Erlang than with a lashed-together LAMP type stack. This magnifies the above benefits. The various parts of your system can coordinate via message passing and Mnesia instead of heavyweight IPC and MySQL, and all the pieces stay up and running continually, leading to less time-consuming state reconstruction.
A dozen or so Apache children all accessing the persistent client state data store is a lock-based hairball. The frameworks all handle locking and such for you transparently, but what they can't hide is the time it takes to do all this correctly.
Erlang is an impure functional language, which implies but does not require data purity; it is also built with multiprocessing in mind, going clear down to the core of the runtime design. These two facts mean you're less likely to spend time waiting on locks in an Erlang based server than one naively built on one of the other frameworks. It is certainly possible to optimize away lock delays in the other systems, but is that really what you want to be doing? Do you want to be on the thousandth team that has to learn how to optimize its web stack after the service becomes popular, or would you rather leave it all up to the tooling so you can spend your time doing something no one else has done yet?