Of course it's less. It uses a 2.5" laptop drive. The iPod uses a 1.8" drive that is not nearly as common. Or cheap. It also means the iPod is smaller and uses a drive with a very high shock rating and was built with the best possible parts for the design. If you want to pay for that, cool. If not you can definitely get "more" for less.
"Do any of the hard drive players offer gapless playback?"
No. There is a "Join Tracks" funtion in iTunes.
"Also can all of them be used as regular storage devices? I know the ipod can be used as a regular harddrive, however the current gen only has a doc connector so you need to carry the dock with you to transfer files?"
In Linux, Windows & OS X the iPod mounts as a HD. It does not need drivers or software to do this. It is a true external hard drive. Since the iPod keeps track of your song ratings, and number of plays it uses a database. Thus it does require sw to transfer music to the player (and add it to the DB).
The 1s & 2nd gen iPod can be connected with a plain ole FireWire cable. The 3rd gens' have cable that has a dock connector on one end and FireWire (or USB2) on the other. This cable can plug into the iPod directly or into the dock, it's the same connector.
Here
Also checkout the $18.95
PocketDock.
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iPod stuff
iPod cans and buds
iPod Battery FAQ