To go along with all the requests for lossless playback, don't forget lossless recording.
Many folks are using their MiniDiscs/Walkman Pro to record in the field. Imagine being able to record 30 hours of true CD quality sound on the iAudio -- a unit the size of a casette box!
I did some tests using the M3 in 320kbps mode, and even then high frequencies (above 16K) are truncated and there is occasional weirdness with pure tones (I was trying to do a harmonic distortion test when I noticed this). I agree no one listens to sine waves for fun, but it would be nice to know one has a prestine signal when recording. Why muck it up with MP3 encoding if you *only* need a couple hours of recording time?
By the way, so far so good -- my recording tests show the M3 has the potential for high quality recording from the line input. Distortion is low (aside from the MP3 weirdness noted above) and signal-to-Noise is around 80dB. I'll write up a full review soon.