Having both the X1-II and N3 myself, I rarely use the X1-II anymore - it's been on a shelf for the last 2 months. I only use it when I travel for playing 24/7 to a bluetooth speaker in a hotel room on random repeat. The earlier firmware was actually better in my case, as the new firmware introduced problems whereas I had none before.
My expectations for the X3-III are very low too. It uses the same processor, OS, and "design" so I would expect the same lag and slowness that the X1-II experiences. It's never been a sound quality issue, so the different sound path of the X3-III is a moot issue for me nor do I care about the balanced output. However, if they fix the firmware for the X3-III to run smooth and then don't backport the fixes to the X1-II, I'll be really pissed.
I hate both Android and iOS products, so you won't see me going there ever. I don't stream audio and I don't care about the Bluetooth...if I didn't have the N3, I'd probably go to Sony (or stick with a Zune!).
I'm sure they're still busy fixing issues with the X5 and it's share of problems, but c'mon, take a week of dev time and resolve the issues on the X1-II! The excuses are getting old, even on a $99 player!