The volume knob on the E12 is great.
I have the E12 and the E17. The E12 pairs well with my iPod Video 5.5G. They are attached using a single Fiio rubber band, nothing is covered up on either device by the band, and the dimensions of each are almost the same. But the E12 is a little heaver than the E17 -- about 40% heavier, and my iPod is now very light after the Tarkan mod. So, over the weekend I went "back" to the iPod/E17 pairing to see how it works.
Well, the E12 is now paired back up with the iPod. The main reason? No, it is not sound (although I like the E12's audio presentation a little better). I kept on accidentally switching inputs on the E17 because of its dedicated input button which, unfortunately, sits right underneath the rubber band. I know, I know: there's a lock switch on the E17 for that reason. But then, if you want to change the volume, you have to unlock, change, and then lock again.
For portable use, nothing beats a dedicated volume knob.