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I liked Pandora before it became buried in commercials after every other song. Mog is good.
The thing about iTunes is that Apple had to negotiate a lot of restrictive licenses to get the music labels to agree to online selling and the model we all take advantage of today. The down side is that the model is still largely in place and only effects the honest folks - pirates get around it anyway as evidenced by the multitude of apps you can buy to rip music out of DRM and off iPods beyond the designed method.
What it is really all about is they intentionally tried to make it irritating to move folders and songs around so the majority of people would simply buy their music through itunes. As aggravating as it is, it was a smart business move by Apple. I hate itunes with a passion but use it for managing ipods just because it is simpler to update them through itunes. As for getting music on and off, you can do it without the apps by mounting the ipod as a storage device and accessing the folder containing the music but it is nowhere near as simple as a regular mp3 player. It has been a while since I have done it as I haven't messed with an ipod lately. The ipod craze seems to be subsiding, the kids haven't even asked me to do anything to theirs in a while and neither have friends. Many of my friends have moved to android smart phones and they are so simple to move music to/from everyone can do it themselves.
If you just need to play music, I can't see any reason to spend extra cash on an iPod anymore - now there are plenty of easier to use mp3 players, even if they don'y have features like Genius and On-the-Go playlists. Also, like you said, smart phones play song files without issue.
Probably the one exception is high-capacity mp3 players with hard drives - they still reign with max storage space.
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