Well, the amount of improvement you are likely to hear going from the 5G, which I have access to (my Daughters), and the X3, which I use to own, will depend largely on the type of files you will be using on the device. The higher the quality of the files the more improvement you will likely hear.
I am always leery of those extolling "HUGE" differences in sound quality between two similar devices. Yes, certainly I feel the X3 is a worthwhile upgrade from the i-Pod 5G depending somewhat on the type of files as I mentioned earlier, but to say it is a huge improvement would be a matter of perspective in my opinion. Personally I find that many undervalue the importance of even subtle sound quality improvements from one device to another. To me these types of improvements are much more tangible and significant over the long haul. My advice would be to not underestimate the importance of small and subtle sound quality improvements. This should not be construed as me implying that the improvement from the 5G to the X3 is subtle.
BTW, I am now using the X5.