A Classic is good enough for me. You can get your iPod to sound better by using a line-out dock, a headphone amp, and a good pair of headphones. I use a Sendstation dock and a Headroom Total Bithead amp, both available from http://www.headphone.com. The sound through my Shure SE530 IEMs is great...
If you really want an alternative to the iPod, you could check out the HifiMan players available from http://www.head-direct.com