I find a big need for portable audio on long flights, trains, airports, hotels etc.; so trying to make it as quality as possible....
Using apple lossless on 5g, through SIK Ram Din portable line out cable to Headroom Total Airhead portable headphone amp to either my Etymotic ER4S, or even better sounding my Grado 225s; IMO this sounds pretty good, and is as good as portable audio comes if you have not tried it.
A 60g Ipod will hold approx. 150 lossless cds, so it sure beats carrying around a PCDP and 24 CDs for your travel audio. Ipod sounds about 90% of good PCDP with line-out to same rig, but convenience puts it over the top. You get as close to audiophile as you can hope to get within the very limiting confines of portable audio; but no it is not going to beat your home rig.
If you have not run across them, there are plenty of portable audio boards chasing the latest greatest sounding portable players amps and headphones with the same style arguments as here.