Not really. I have a friend that has a 2nd gen that works perfectly. Only problem with them, assuming you take care of them, is that the batteries stop taking a charge after about 30 months. Luckily I got the replacement plan, baby
Radioshack replacement plans sound like a ripoff when they try to sell them to you, but they're really REPLACEMENT plans. Anything goes wrong, get a new one for free. I plan to have my battery stop working about 23 months and 29 days from when I bought mine 
Being a cheapskate and a total stick in the mud, I have still been holding on to the battery that I got in mine 3 years ago. Surprisingly, it's still working. I've had to open the bastard up and re-set the pins in the hard-drive a few times, but there have been no major problems. The fact that the batteries are pretty much guaranteed to be finite is just plain annoying, especially since I don't recall ever seeing Apple-brand replacement batteries available off the shelf at the retail shitholes that sell the Ipod (I haven't recently looked into this, so I might be wrong). I know that there are several third-party companies that sell their own versions of the battery, but it would be nice if Apple didn't make it seem like there isn't any option besides mailing the piece of crap back for a $200+ battery replacement (which, since opening it, I figured out how to do).
As for the sound quality issues, I have decided to rest my laurels on the middle-ground of listening to MP3s with 256-320 quality, simply because I got tired to buying hard-drives and burning DVDs. Aside from that, I still buy tons of used CDs and listen to them on my $100 Sony boombox or the computer. I'd love to become an audiophile and buy a sick system, but I usually just end up buying more discs, sheet music, and xerox credit instead.
If I had a 160 gig Ipod, I could probably fill a lot of it up with my jazz/improv collection OR my classical collection. Both genres boast monster track lengths (many experimental jazz/avant albums consist of one big unbroken track). However, I still prefer the cheaper models because none of that sh*t will matter if it falls out of my pocket into a mud puddle or gets crushed when I roll over it in my sleep.