I have a SanDisk/Sansa Fuse. 4GB internal + 4GB microSD. I have most of my CD collection, free podcasts, and a audiobook or two. Get most of my music & audiobooks at half-price stores, a few audiobooks from Audible.com, and the podcasts from various sites including iTunes. Windows Media Player manages it well.
Skip the iPod.....Get the Fuse....
The Fuse is great - mostly. I love it, it has good sound quality, is reasonably fast to transfer to, and was cheap - er, a better value than an iSomething :) I bought my Fuse 2G for $40 or $50 a little less than a year ago, from Costco(naturally, a the 4GB was available less than a month later for the same price...). It is great, can receive FM, is quite reliable and has very good battery life. It is also pretty easy to navigate through files with, although using some organization and using ID3 tags makes things vastly simpler. As mentioned, it becomes tedious to get through, say, long lists of podcasts or the main music folder.
Couple things to be aware of:
My Fuse, which sees heavy use in not-nice environments,(in a truck, in my pocket, on a forklift) has developed the extremely irritating habit of "refreshing media" if I put pressure in the wrong place - basically if the microSD slot gets squeezed just a little bit, which can happen if I push the "back" key with anything more than just a little force. My wife has an identical Fuse, which behaves itself just fine, probably because it hasn't been dropped/squashed/beaten up.
Using any larger than a 2GB card will cause the "refreshing media" step after file transfer or card swap to take forever. I mean, four or five minutes for an 8GB. Just a thought.
I heartily recommend Librivox, although your listening enjoyment is heavily dependent upon the volunteer reader's performance. For example, I recommend against "The Collected Works of H.P. Lovecraft". Some of them(many stories, many readers) came out OK, but others("The Terrible Old Man") were positively mangled.
I've lately been listening to Free Talk Live's podcasts, about which I will soon start a discussion topic... they're thought-provoking, at least.