So color me a bit dubious about the iPod experience. Based on my experience: they're not reliable. Another deficiency with the iPod -- their sound isn't really that good. Not "near CD quality". More like a good chromium dioxide cassette, without the hiss. (But if you put uncompressed music on an iPod, the sound quality matches a CD. But then you're not going to get your whole music collection on the device.)
Still, I do love the gadget, when it's working that is. I'm thinking of getting a nano, which has no hard drive and therefore will be much more reliable (or so I would hope).
As for your defective iPod, you must have had some bad luck. I've dropped my 40gig iPod multiple times, once in a puddle of water and it still works fine. Though the day I dropped it in water, it didn't work right for about three days (display was faint and scroll wheel didn't work very well). Then suddenly it went back to normal again.
Try 128-bit WMA on a Creative player - it will blow your ears off. If you've got the ears for it, go for a higher bitrate, but 128WMA = 192MP3 or better.
Creative is known for the audio quality of their products, especially compared to the iCult.