iPod Touch would be a good solution to your points above: Seamless playback - check. (I've actually got Dark Side Of The Moon on my iPhone right now and just checked the transitions. Perfect.) FLAC can be converted to Apple Lossless quickly and with no loss of quality if you really want to burn that much storage space on your phone. (Unless you're using a quality outboard DAC I can't see it being worth the tradeoff. Coming out of the standard mini jack, you'd be hard pressed to tell the diff between lossless and a decent mp3/aac encoding.) You got me on the ogg point, although there are App Store apps that will play ogg. I can't speak to their utility/value as I don't use ogg. Price - no contract, obviously, and you get a very decent little device that does way more than just play music. I personally wouldn't bother with less than 32GB which is $299, so I guess that is on the high end, but as I said, it's way more than just an mp3 player. Controls... touchscreen is a matter of taste I guess, although I do have a pair of earbuds with an iPod remote built in that lets me change volume/pause/skip songs. Headphone amp... see my point above re high quality DAC. If that's something that matters to you you know what to do and the iPod would be the cheapest part of your hardware chain most likely.

i'm writing a subsonic app for iPhone right now that supports offline mode... every song you play is cached (by default, user selectable option to disable) on the phone's disk and available even when the phone is in airplane mode.

The development tools are free, and for $99/yr you can run any app you care to write on the iPhone. No, you aren't guaranteed to be able to put it in the App Store, but that's Apple's storefront so they get to make the rules. I'm fine with that.

Valve doesn't have shareholders, it is privately held.

http://bandcamp.com/tags I don't know how big the catalogue is, but I'd guess tens of thousands by now. And, bonus, you're not supporting the RIAA. There are loads of shops that will sell you lossless. Here's another very good one: http://bleep.com/

Convert them to ALAC. You lose nothing and gain Apple compatibility.

google's high speed fiber will not speed up the slow ad server.

iPods don't encode anything. Maybe you're thinking of iTunes? If your encodings are shoddy, use a different encoder. The dynamic compression ("SoundCheck" in Apple lingo) can be disabled via the Settings menu. iPods are also capable of storing and playing Apple Lossless (ALAC) files, which sound identical to the original source.

Amazon has a very nice page on AWS security you can read. http://aws.amazon.com/security/

It is new. There are two concepts here that you are confusing: off-contract and unlocked. You have always been able to buy an off-contract phone (for $599 or $699), but it would only work on AT&T (ignoring jailbreaks). As of today you can now buy an off-contract, unlocked phone direct from Apple, for $650 or $750.