Turkish:
Solid state MP3 players comprise a bit of Rom (flashable with a bit of luck) for what passes as the operating system and varying amounts of ram to hold the data (music) - just like your desktop computer.
Hard disc players mimic your computer even more effectively and adds more storage by a factor of ten or more. This allows them to hold much more than music so you get games, PDA facilities, picture storage etc depending on the manufacturer. The ram now acts as a cache - 20 minutes worth in the case of the iPod - to make it totally skip proof and allow instant forward/back operations.
I wouldn't get too excited about the extras like schedulers though - the lack of a keyboard makes them only practical for the most determined anal types

It's strictly a mirror of the stuff you've prepared on your desktop or laptop. Good however if contacts are important to you but if that's the case surely it's all downloaded onto your phone???
Yep, 10 gigs is an awful lot of music. If you look at other peoples playlists and most accessed tracks you'll find that leaning on their throats will cause them to agree. If people really needed that much we would see many more homes with the 250 disc jukebox CD players that have been around for years. In reality they are very slow movers and have never taken off even at the going rate of (strangely enough) 250 quid. What are popular though are players with between 3+5 CD capacities - funny that isn't it? It could be argued that solid state players more than adequately match the needs of most users.
Therefore I'd also argue that the vast majority of 40 - 60 gig machines are mindless willy waving if folks claim to have lots of music on them. Sale by spec rather than use. Cor! For an extra X dollars pounds I can have thousands more tracks!!!! err, if I liked any.
As to the price disparities: all computer users get lumbered with this pound for dollar scam. What can I say other than get one in the States or investigate the advantages of buying one outbound from (chokes me to say this) Dixons in a UK airport.
Arm the Floats: Can't answer your query without an honest assessment of how you listen to music at home. Ghettoblaster, mini/midi system, hi fi??? It's all relative. These players will vary both between each other and depending on what is normal to you.
What I can say is that in my furtive lurking in establishments from Circuit City to the souks of the Middle East I've never witnessed a single buyer actually listening to what they are considering buying. We're talking about music here not musak. For most of us it's personal, emotional, exciting, engrossing, redolent of memories and something that needs a little more care taken than our usual decision making process in buying a peripheral.
Regards
Rob