The iPod has 'proper drag-and-drop', in iTunes you just select manual management of music and video. That's what I do with my iPod, Nano and iPhone, as I don't want everything in iTunes going onto the device. iPods will also play at least two formats, mp3, the most common download format, as well as AAC and AAC+, which are non-proprietory file formats otherwise known as MP4, designed as a higher quality replacement for MP3.
as far as sound quality as concerned, there is no substantial difference between iPods and most other players, other than that caused by the headphones supplied. As Sony actually make their own 'phones, theirs obviously have the edge. The fact is that most people happily get their own 'phones as supplied ones aren't guaranteed to be be to everyone's taste anyway. Sony's music handling GUI has always been notoriously shonky, but their players are all very well made. I have no real issues with Sony, I have and have had, many Sony products, but the simple fact is the iPod's controls are the easiest and most intuitive of any music player around. Apple's English designer, Jonathan Ive, is probably the finest industrial designer in the world, and having used Apple products for the last fifteen years, and an iPod for the last four, there's nothing else to match.
Oh, and nobody else does a 160Gb player.