This is exactly the type of thing that bothers me about Apple.
Whatever one might say about the sleekness of the iPhone, or the OS X, or the iPod, I still cannot get passed their proprietaries. The iPhone is AT&T only, or OS X is Apple hardware only, and now the iPod will be iTunes only. Sure, say what you want about really cool technologies like click-wheels, multi-touch, and really freakin' sexy laptops (they really are), but only after being told exactly what hardware or software is and isn't allowed to interoperate. Consumers lose because they have less choice, and innovation is suffocated by proprietary choke holds. These proprietaries are Apple's version of Microsoft's software patents.
And that's why I dislike Apple so much ... they're just as bad as Microsoft.
Please, I know Joanna still reads my blog (and uses Apple) and maybe I can get Grant on here (converted a few years ago to Mac himself). I'd appreciate some comments on why I'm wrong.

Okay, I'll bite.
I don't really see so much of a problem with a company forcing you to use their device manager to load music to their device. It's not like they're forcing you to use iTunes for all your music listening. There is definitely no problem using iTunes as your manager alongside some other app for listening, sorting, whatever else you want to do. There is nothing stopping you from using winamp for everything but loading to your iPod, and then firing up iTunes only when you want to sync up. iTunes can be a bit finicky about trying to reorganize your music when you use it in addition to another player or using the filesystem for organization - but it's not too hard to finesse that.
Now the argument about edging out alternative operating system users, well that's valid. However, I don't give a ton of weight to that argument because (a) I feel like DeCSS abused it, (b) When you make a choice to use linux you're making a choice to break from the mainstream and it's not reasonable to expect everything's going to be painless, (c) someone will get around it soon enough and (d) The number of people that affects is really pretty small. Apple doesn't have to cater to this tiny minority to make millions. Sure it'd be nice if they did, but I consider them to be under no obligation to try to cater to one small minority of potential users - many of whom won't want to use iPods anyways because they're just like that.
The other thing I do sympathize with here is that adding this type of encryption and whatnot doesn't ADD anything to the device. That is, programming this in does nothing to HELP anyone. It could have implications for DRM and forcing users to use the iTunes store, but given that Apple has acknowledged the importance of DRM-free music and making DRM-free music available, I don't think this is likely. Why they did add it then, I don't know.
You also have to remember that essentially all iPod users are going to be absolutely happy with the iPod/iTunes pairing. To them, it's great. You plug in your iPod, drag and drop a bit, and you're set. Maybe this model stifles a competitor who wants to do something a bit differently (better?) but I feel like even if there was a competitor most people don't want to mess with it - they like that their apple stuff "just works."
On the other hand, one part of this that doesn't come up here but which I do find troubling is that it's usually somewhere between difficult and impossible to use alternative file formats on the iPod. I don't have one, so I've never played with it, but from what I understand it won't do OGG or some of the other formats - though I guess you can get it to with firmware flashes or something - like I said, never tried. That shouldn't be so difficult. Both the iPod and iTunes should really get on board with that.
Or everyone could quit whining, go buy a mac, and f'ing like it ;)
Though I don't see the appeal of the new iPods. I don't want video on my iPod. I think it's silly. I'm still debating whether I want to buy a new laptop to get the free iPod (pretty much have to decide today I guess) but I definitely don't want one from the new line of iPods.
-G-
Hiiiii Grant!
I have an iPod, and I own a Mac. Not by choice, I had to purchase a MacBook Pro for my major. But I'm pretty much a convert, mostly because I still have the option to use Windows on my laptop, which is nice.
About the iTunes thing, I don't see it as much of a problem. There are a lot of things where you have to install a specific software first before you can use it. My 128mb MP3 player did that back in the day, and my iPod does it now. I HATE iTunes with a passion, but like Grant says, it works, and I'm not going to bother with it. Probably because it syncs up with everything else on my laptop, heh. But I hate it on the Mac, and I remember hating it in Windows.
I also don't see the need for an iPhone, or an iTouch, or whatever it's called. I wanted an iPod video because it's thin. I don't use it for videos, because if you're going to watch a video or a movie, you might as well get a portable DVD player. Watching a movie on a screen that small with crappy audio output is dumb.
As for the iPhone, cell phones work just fine for me thank you (mine doesn't even have a camera, that's what my camera is for!).And you're right, the iPhone only works with one service provider (though I think people have hacked that). I think Apple makes everything so specific because they're snobby, want control over their more techno-casual customers, and believe that they will sell out to everyone else even with these limitations, and the kicker is that they do. It all comes down to being innovative and very keen to aesthetics. You can hate on Apple all you want, but the bottom line is that they revolutionized a ton of products, from computers to MP3 players to the cell phone, so people who buy their products end up with a certain status. The "I own the latest and coolest product on the face of the Earth, though now I'm poor, but do you want to touch my iPhone?" status. I don't think the majority of their customers care whether they have to switch to AT&T or reorganize everything into iPod.
Now I'll tell you why I hate Apple. I believe that they are unfair to their loyal customers. I understand revamping the design of a product say, every three to five years. But every year? That's just a slap in the face for everyone who buys anything Apple-related. I first purchased an iPod Photo. Never heard of it? That's because it existed for a mere 5 or 6 months. I purchased it pretty late in the game, and I'd say in the next two months, they came out with the iPod video (which was also $250 CHEAPER). Needless to say, I was really f'ing pissed. Well now everyone who's purchased an iPod video realizes that there's an even newer version out. There's a new version of the iPod nano. New version of the iPod shuffle. They're coming up with a new version of the iPhone, AND they lowered the price of the current model by $200 months after they released it! How are they supposed to keep their customers happy when they essentially tell them that their brand spankin' new product they purchased is now cheaper and better? I refuse to purchase anything else Apple related, unless it's a laptop that runs SO fast, I feel like I'm actually living IN the Internet. Other than that though, in the words of George W. Bush, "Fool me once, shame on you, fool me twice, I WON'T GET FOOLED AGAIN."
Hi Joanna :p
Ironic that you point out Apple updating stuff quickly like that. I actually did spring for the "buy-a-mac-get-a-free-ipod" deal and bought a 13" macbook and an 8GB 2nd gen Nano. I don't WANT video! I've often thought about trying to get an old iPod off eBay or something because I didn't want the new stuff. I like that the last nano was still available without video, which is one of the big reasons I got it. I only really want it for working out. I suppose I could strap a video iPod to my handlebars and watch movies on my long bike rides, but that's probably a bad idea...
I actually have to confess, too, that I don't really hate iTunes. I use it as my primary audio player on here. I've not really bothered to go out and research what else is available, which I might once I get my new macbook in, but I've gotten comfortable with iTunes and it works well for me. I've actually been using cover flow lately too and once you get used to it it's kind of a cool way to browse music. That is one of the cool features of the video iPods (but not worth the expense, IMO). I also like using the airport express for remote audio. One of my roommates has an iBook so either he or I can stream music to the living room as though the speakers out there were plugged into the audio out jack on the computer and it takes literally about 20 seconds to set up. Sure there are lots of other media systems out there that are more powerful, but this is just too easy. That kind of interoperability makes me not too upset about the "loss" of other competitive interoperability that people are getting all upset about with these updates.
And more back on topic, I've seen some other discussion since this broke about how those hashes are [likely] nothing more than innocent checksum features that help the integrity of the data. I haven't seen if anyone's figured out how to manipulate them yet, but their inclusion as checksum data makes a lot more sense to me than some ill-willed attack on the FOSS community, who, frankly, probably isn't even on the radar screens in Cupertino.