I think the quality issue (comparing to vinyl/CD) is irrelevant. iPods (and things like iPods) change your listening habits, audiophile nuances don't matter because ipods are in the background, not the foreground.
Listening to music is much more casual with ipods, even with CDs you have to take an active role in choosing and playing them (and finding them, and hold on…. why's this one in the wrong box?). With an iPod everything is there and you just leave it to run. Its much more passive, like a radio station but it only plays music you like. But you get less involved in choosing, you just let it burble away in the background.
For me it has had the odd effect that I'm actually far less interested in my music, I play it in the car or when I'm on the train, but I wouldn't put music on at home in the same way thay I used to spend an evening listening to CDs or albums. The plus side is the randomness means you constantly discover bits of music you'd otherwise overlook, the minus is you less of a trainspotter and less of a fan of your own collection and you can't remember what the the track was if you ever try to find it again.