I have more iPods than I can even count, and the big ones (the videos, with the 30/60/80 gig drives) definitely have problems. They need to be reset pretty often, but once you know how to do it, its a pretty painless procedure. But still, you are right -- these things have more defects than they should. On the other hand, I don't know of anything that lets me carry around 15,000 songs anywhere I go and have, basically, my whole music collection with me. So I'm not prepared to give it up. And iTunes, while it has flaws, it is the best software for managing large collections of mp3s. As long as nothing else connects to iTunes, the iPod is going to be strong.
You put your finger on another big problem with Apple. Customer service is simply awful. Especially in those "Apple stores." They simply do not have respect for their customers, and they have no mechanisms in place to recognize regular, repeat customers where it makes a ton of sense to deliver a higher level of care.
The quality problems are not limited to the iPods. I have recently purchased several of their laptops, and have had serious problems with at least half of them.
There is another cause for concern. As Apple evolves from a computer company to a consumer electronics company, it is well known, and obvious, that resources are being stolen from their prior core products and be put on things like iPhones and Apple TV or whatever its called. This puts the computer franchise at risk. There are already signs that they are coasting when it comes to computers.
Still, for many of my uses, nothing beats a Mac. For music composition, for example. There is no PC in the world that can deliver the speed and user interface performance of a Mac running music applications like Logic, Live or Reason. And, of course, OSX is hugely better than any Windows operating system, including Vista. But Apple's advantages are dwindling and they are in danger of losing their edge completely if they don't refocus the company.
Apple right now reminds me of Amazon, or Boston Market -- expanding too quickly, abandoning their core focus. They are also way too dependent on a "mystique" that will be dissipated if they stumble. They will be saved, at least for a little while, if the iPhone is a hit. If the iPhone flops, and I suspect that it may, Apple could be in real trouble.