I did the SD/USB thing for awhile but was pretty displeased with the quality of the playback, the response time, etc. I went ahead and bought a 120GB iPod Classic, which resolved all of the issues I was having with the other media. It's much faster response time since the iPod does all of the processing/computing, and you get the nifty (if gimmicky) album covers displayed right on your screen.
I was originally pretty anti-iTunes, but it's actually not as bad as I thought. The whole podcast thing is pretty neat, too.
I sound like an Apple ad, don't I?