Well it could be quite useful, especially for the computer illiterate and especially if done right ("paranoia" ripping, licensed to lame mp3, upgradable firmware for new features/codecs, etc).
Also there's the advantage of being able to play both cd's and compressed audio on the road. An ipod type thing is all well and good, but let's say you go to a used cd store and went to listen to some new cd's, but the few (or only) decks they have are being used by someone else, you're outta luck.
I don't have an ipod but have a portable cd/mp3 player. I do have a laptop but that's not exactly something I can toss in my pocket worry free.