I submit my TV setup at home for comparison and reference:
I have a 42" plasma EDTV (step below HD, but hard to tell) with a OTA HD tuner, surround 5.1 speakers, blah blah blah. I choose to plug in a standard non-HD TiVo and watch a picture compressed and stretched.
Why?
Convenience. I much rather watch any TV -- even sports -- that I can skip commercials, watch whenever and save for later.
I feel the same way about my iPod. It syncs with my iTunes (duh), which also networked to my two TiVos, wife's laptop and two other family iPods. The iPod is small, holds a ton of music, works great, plays podcasts, etc. And I can watch videos and TV shows (that I record using EyeTV on Mac) anytime I'm stuck somewhere.
Honestly, if I had to choose between (A) iPod and earbuds or (B) non-iPod player with my amp and cans, I'd choose A every time. I'll probably be buried with a Generation 32 iPod.
Oh, and I'd buy an HD TiVo if I could stop upgrading my audio!