The Ipod plays waves, or at least used to. I bought a "2g" Ipod (the first series to sync to windows, no I/O on the bottom, firewire on the top), and all I ever played on it for the first 2 years was WAVs. In retrospect, this was a silly waste of space, for all the reasons cited by Alex B.
If you really want a "portable" player, wait 2 months for apple to bring out the 4 gb shuffle. ALL the disk-drive Ipods will skip when shaken, and with WAV format, 1 song is bigger than the total cache, so you can forget jogging with it. Ipod has the best sound, the best of everything, but like Alex B says, it isn't good enough to notice the compression. I recommend the extreme VBR / mp3 for the Ipod. I've used both CBR and VBR, and there is a noticeable difference.
I believe the Ipod tone skews towards bass. There is an EQ setting that will bring it back towards treble, sharpening the sound.
If you want to run MC, forget portability and think transportability. One day I'll get a new laptop just so I can take my whole library on the road. Then I can browse MC and play tracks with >112db SNR, two things you'll never do with an Ipod. On the other hand, I could never imagine skiing with a laptop, or running down the streeet with it.