IMHO the Cowon D2 and A3 are at the moment the best you could buy.
The number of supported audio formats is huge:
MP1, MP2, MP3, WMA, FLAC, Vorbis, AAC, AC3, BSAC, True Audio, WavPack, G.726, PCM, Audible, Monkey Audio (up to -c2000)
Those could be put in the following containers:
MP3/2/1, ASF, WMA, FLAC, OGG, M4A, MATROSKA (MKA), TTA, APE, MPC, WV, WAV, AC3
You could tag your music with the following tagging formats:
ID3 V1, ID3 V2.2/V2.3/V2.4, Vorbis Comment, APE Tag V2, MP4 TAG, MATROSKA Tag, WMA Tag
Display of CD Cover and Lyrics is also possible
The resolution is even enough for people with bats ears:
Max 96kHz
Very powerfull headphone output:
A3: 32 mW @ 16 Ohm
D2: 37 mW @ 16 Ohm
Equalizer & Sound effects:
10 band, 8 presets (Normal, Rock, Jazz, Classic, Pop, Metal, Vocal, User)
BBE, Mach3Bass, MP3 Enhance, 3D Surround
But a real audiophile turns of all this stuff and keeps the EQ flat anyway
I've been looking for a while to find something better, but I couldn't find anything that beats those two. I've choosen the A3 with 80 GB as it has a 5" screen with 800 x 480 pixel resolution. It's a pleasure to watch my self ripped japanese DVDs with subtitles with it. H264 playback is absolutely no problem. The only flaw is the little joystick which can sometimes a bit tricky to use. IMHO it's also a bit heavy and bulky for daily portable use. So maybe I'll get a D2 with 16 GB soon too