Check out the FiiO X3. This is an affordable hi-fi portable.
The iPod isn't bad, it is just burdened by the Apple firmware on it. I would recommend trying out Rockbox on it, though it is not a stable port, so use it at your own risk. Have heard of people doing it with no issues though.
Also, using a dock connector > RCA > headphone jack connector, will give you better audio quality than just using the headphone jack. I experienced a noticeable improvement in the SQ from my iPod Touch doing it that way.
Yes for the money it is an excellent player. Amplification is strong, sound is relatively full and on the warm side. With majority of IEM's I find little to no improvement going amped via dock connector versus headphone out.
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