I read with interest the Wadia iTransport review. I recently got an iTransport myself, and think Jeff's review of it is accurate. Certainly the sound quality is significantly better than what has been available to date from the iPod at a reasonable cost (as Jeff notes).
The point which I thinks deserves more consideration is how the iTransport stacks up against a music server based system. With a music based system, you can certainly store much more than you can with an iPod. Manipulating song is much easier on a music server. And if you set up a Mac mini based system, the cost for that is not much greater than the Wadia + iPod.
The iPod/iTransport on the other hand offers certain advantages--your friends can bring their music collections over (via iPod), as Jeff notes. Equally important (especially for me), I can drop the music in the Wadia when at home, take it with me in the car, listen to it on the go, etc. So the Wadia certainly improves sound quality if you want a single device. Also, you don't have to sit in front of a computer to access your music.
I'm not trying to start a flame war, just a discussion.