Well, I sourced a 2nd gen 4GB iPod Mini for $50 (in good condition with a couple of extras). I'll probably keep it as is for the time being so I can see how I like the sound and see what shape the battery is in. If its good, I'll keep it and then probably put a 16GB card and possibly a replacement battery in (where's the best place to get the latter, looking for something good quality, higher capacity than the stock one, but say about $10). I might also consider the DIYmod, but that depends if I've got money for a decent amp (great another thing to research...), which I'd rather go that route than with the 32GB card.
In the future, if prices fall enough, or a much larger one at the right price comes out, I might consider upgrading it, but I'll probably just pass and buy whatever new player is hot at the time (hopefully there'll be a nice high capacity flash based, good sounding player available in the future).