iPod all the way!
I ummed and ahed for quite a while myself before I settled on the 20Gb iPod. It was love at first sight - even opening the packaging was enjoyable!
Pros:
It's small and lightweight.
It's not even half full with 1800+ (and counting) tracks on it.
It looks great.
It's really easy to use - the interface is a benchmark for ease of use.
It sounds great - standard MP3s aside, the AAC format is supposedly better than MS's WMA format.
iTunes is really well designed - it makes everything an absolute doddle (unlike Sony's software).
iTunes store is also shaping up quite nicely.
There's a large community of users out there for support.
Cons:
I measured battery life at about 7.5 hours continuous play. However, there's no battery 'memory' effect.
Thieves want one too.
It scratches quite easily - some kind of case is advisable; slipping it into your pocket with your keys isn't.
Price.
They're ridiculously cool and trendy. People might think you are too.
I suspect that if you go for anything other than an iPod, you will start looking at iPod owners with a certain sense of envy and slight tinge of regret.