Hey I just found on head-fi a link to an app for the touch/iphone that plays FLAC
http://itunes.apple.com/ca/app/flac-player/id390532592?mt=8,
*edit:just saw it doesnt come cheap....but is there, haven`t checked for any free or cheap alternatives yet(just did seems to be a few cheaper ones.).
also there are some apps that enable you to watch different movie codecs too divxplayer for AVI etc.
My friend has the Cowon X7 and seems to like it. i can mail him and get more impressions If you want.
Get EQu app and/or equalizer App for your wifes ipod touch (4G) and have a play, see what you think. Coupled with my ibassoT3 (or without) it does turn the touch/ipod into a totally different machine.
********************************************************************************************************
extra info:
*The first few days I had low battery life, but read on the internet to do a restore on itunes, then set up as a new device not using a backup. and yes, good battery life now.
*Also read about airplane mode and turning off spotlight, and notifications etc for a longer battery life.