OK, I'm new here, and I'm willing to admit I might be wrong, arrogant, elitist, whatever.
I've never seen any FiiO marketing for the X3. If it was marketed as a general purpose plays-all-popular-formats player, I apologize. I found out about the X3 and the company from reviews raving about its ability to deliver excellent hi-res playback. On that basis, I bought one.
Do I care about MP3 playback quality? Sure, but it seems reasonable that it's not the top priority for a high-end player--which the X3 is, despite the low price. Would I expect a $200 pocket player to support more than 64GB of external storage? No, and it wasn't a problem for me. I have almost 2TB of legally acquired lossless music, so even if I wanted my whole collection on a pocket device (which I don't) there's nothing out there that can hold my collection, even if I converted it all to MP3/AAC.
My MP3 collection is very small. I have some remixes that were never released on CD, some out-of-print stuff, and some live stuff. I own an iPhone, but I've never bought anything from iTunes and never will because I don't like Apple's approach to content (especially that you can't buy lossless). If I want to buy an MP3, I buy it from Amazon.
I'm an old guy, I've always bought albums rather than songs (unless you count 45 rpm singles) and done my own rips. I understand that there's a generation of music lovers who've never bought an LP or CD, but why would folks from the download generation buy an X3 instead of an iPod (which has a much better user interface) or a Cowan or whatever?
Again, maybe I'm wrong, but the X3 seems like a niche product that will probably be replaced by a mass market device as the FiiO name gains traction. Just the fact that you can use it as a DAC marks it as niche player--the mass market doesn't even know what a DAC is or does.
The point I wanted to make (which apparently I did badly) was to say I have confidence that the FiiO people know what they're doing, that they have their priorities right, and that they're taking a lot of undeserved criticism. Feedback is fine, but criticism can quickly become unwarranted noise.