I think you pose an interesting question and I guess we are already seeing some changes on the market not to say the least with Apples iPhone. I think there is room for both types at least for a while longer. When you are out running you want the smallest possible mp3-player. When you are travelling somewhere you want to have as much as possible into one device so you can travel lightly.
I think we still see a lot of compromises when it comes to choosing an mp3 playing device. I would like to see a mp3 player with internet connectivity so I could listen to spotify, pandora, last.fm etc. Until then I guess I will use Itunes and whatever ipod device I can get my hands on
.
At the moment the biggest downside I find with using a cell phone as mp3 player is that lack of easy connection with my favourite ear phones. I think however some of the latest Nokia models feature a 3.5 jack for easy headphone connection and this is for me at least a long awaited feature.