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Well, now they can:

http://www.apple.com/ipod/specs.html

Two recording formats:

Low Quality Recording: 22.05 KHz, mono - Speech Recording
High Quality Recording: 44.1 KHz, stereo - Music Recording

Ask and you shall receive.

I've Been using Pogo Products to do direct to MP3 recordings for over two years now, and I have been very happy with the results (Radio YourWay LX - built in microphone / mic in/ line-in):

http://www.pogoproducts.com/

What I REALLY like about the Pogo Products is that they record directly into an MP3 file (encoding levels / quality is user selectable)
Recording directly into MP3 saves time, and makes good use of a 1GB SD card. (1GB holds quite a long speech recorded at 56/44!)

So your musical friends can now record to their iPod or make quick demos using a Pogo Radio YourWay LX 512 MB + 1GB SD/MMC Cards...
http://www.pogoproducts.com/radioyourway.html

( I've been hoping that if Pogo Owns that technology (hardware MP3 encoding), that Apple would buy the whole company just to add MP3 recording into the iPod. But I don't know if Pogo owns the technology,
or if they are repackaging someone elses chips into their products...)

Well, now they can:

http://www.apple.com/ipod/specs.html

Two recording formats:

Low Quality Recording: 22.05 KHz, mono - Speech Recording
High Quality Recording: 44.1 KHz, stereo - Music Recording

Ask and you shall receive.

I've Been using Pogo Products to do direct to MP3 recordings for over two years now, and I have been very happy with the results (Radio YourWay LX - built in microphone / mic in/ line-in):

http://www.pogoproducts.com/

What I REALLY like about the Pogo Products is that they record directly into an MP3 file (encoding levels / quality is user selectable)
Recording directly into MP3 saves time, and makes good use of a 1GB SD card. (1GB holds quite a long speech recorded at 56/44!)

So your musical friends can now record to their iPod or make quick demos using a Pogo Radio YourWay LX 512 MB + 1GB SD/MMC Cards...
http://www.pogoproducts.com/radioyourway.html

( I've been hoping that if Pogo Owns that technology (hardware MP3 encoding), that Apple would buy the whole company just to add MP3 recording into the iPod. But I don't know if Pogo owns the technology,
or if they are repackaging someone elses chips into their products...)

Wow an article on the FUTURE of Digital audio. MP3 phones! Will the miracles of early 2001 never cease?

Andru: [...] I am not expecting huge storage on these phones either, otherwise they become indirect competition to the iPod. Instead, I think we will see the phones able to port about 50 tracks.

ME: Bah! The phones will certainly be strongly branded as iPod phones, and Apple will certainly recieve licensing fees. That's not competition in any meaningful sense. In addition, time has shown that any attempt to limit a music player's usefulness arbitrarily (like a stupid 50-track limit) will certainly backfire. They say themselves later on that hard drives are great because you can store your entire music collection. If musicphones are limited to 50 tracks, I predict abject failure, and I bet the cell phone manufacturers are right with me.

Hector: With the players of the future, we will be able to schedule personal recordings of incoming broadcast music on a given hour, and play it back when we have the free time.

ME: Bah! There's already products that do this, and although they are popular in a small part of the population, Pogo is not going to upset the iPod any time soon. If you really want to see a model of the future, I'm pretty confident it's to be found in Podcasting. As traditional media middlemen grow increasingly desperate to preserve their vanishing way of life, more ways are found to completely bypass them. Podcasters are individuals who make their own audio content, and provide it for download. Why cling tenaciously to traditional audio delivery methods such as radio with its primitive 1-second-of-audio/sec transmit rate when there are better methods available? Imagine instead a few aggregation service providers and recommendation engines with links and software to help find and download the freshest Podcasts you're interested in!

Hector: I'm tired of having to burn CD's if I want to play my files on my car stereo.

ME: I've been using my Nomad Zen in my car for two years. What's your problem, Hector? I'm not disagreeing with your desire to have a nice wireless way to hook up my Zen to my car stereo, but, dude, BO-RING. Think about this instead: When you pull your car into your garage, it uploads information about what you've been skipping over and what you like to listen to during various times and various driving styles to your home media center, which then, next time you log on to shop for music, makes recommendations, which your car stereo downloads wirelessly across your 802.11 net.

ME: Or heck, 802.11 is so ubiquitous nowadays, your car could download a track or two while you're in the supermarket parking lot (because it's a relatively big download) and store it encrypted. When you get back to the car, your heads-up display could ask if you want to buy the song. A quick purchase transaction later, you get the unencryption key, and away you go. New music on the fly.

Andru: One thing I do expect in the future, is to see flash MP3 players slowly diminish from the market. While it is more shock absorbent, I just don't see the cost of the medium as being feasible going forward, especially with hard drive prices plummetting.

ME: Buh? Maybe they haven't noticed that Flash prices are also on the move. Assuming the same size, speed, and reliability, I consider it a non-issue really.

Andru: With convergence coming into play, people are wanting to start putting pictures and video on their portable devices as well.

ME: Yes, just as Sony's Photo Walkman and Video Walkman were follow-on smash successes after the breakthrough cassette player. Oh wait. No, sorry, I was just smoking cr

I got a Radio Your Way and use it to record talk shows. I later convert them to MP3 and I coded a WMP-based player that allows me to skip ahead/back by 1-minute or 5-second intervals, which lets me bypass commercials and news. It's great. Sounds like this device would eliminate the convert-to-mp3 step, could record up to the capacity of the hard disk (my RYW is good for about 16 hours using its internal memory) and it couldn't possibly have a worse user interface than the RYW. I've consequently ordered one of these dudes to either replace or supplement my RYW. It's sure a hell of a lot cheaper.

I sound like an ad. I feel like I'm astroturfing. I wish I worked for these people.

Surreal Dreams

Wow, I never saw the flipster before. Anyone have experience with it? Very nice that it plays movies and audio, has on-board 128MB capacity AND allows for MMC card access. That's pretty sweet, although $500 is pretty steep.

I just pre-ordered my NEX ia a few days ago (it doesn't ship for a few more days; $130 + s/h for a NEX ia + 128MB CF) - my NEX II served me well for two years and just recently died. One neat feature is that it does do 64kbps MP3 recording w/ an internal mic. I was originally looking for a decent MP3 recorder, but unfortunately, one doesn't exist (the only ones that have level meters for example are $1000+ bulky pro units).

Anyway, I posted some research on my blog which might be of interest:

My old NEX II MP3 player just recently died on me. I started taking it apart, and it looks like I might be able to do some soldering to possibly get it working, but chances are slim (approximately corresponding to my soldering skills). It looks like the new NEX ia is coming out though, with voice/FM recording, better firmware, and possible Ogg Vorbis support, among other things. I sent an email to see what the recording quality is (hopefully with line-in capabilities), and to see if some slightly annoying NEX II bugs have been fixed.

From correspondence w/ Frontier Labs:

• improvements: multiple folder support, alphabetical song listing, more buffering, improved shuffle (but no m3u support, so you'll want to keep your CopyNex handy - see also: FATSort, PlaylistExpander)
• Ogg Vorbis is actually being worked on, for the NEX II's as well as the NEX ia and will be released as a firmware upgrade
• 64Kbps recording (can record at higher bitrates, but no selection mechanism in the firmware right now)
• No (recording) level-meter
• No line-in, the only external input is the built-in voice recording microphone
• Can play back MP3 files at the same time as recording

Perception Digital has a PD-095-01 Portable MP3 player which has a can record from an internal mic, FM, or a line-in at 13Kbps voice or 48-320kbps MP3 (!). That's pretty frickin' awesome. It's a little bit on the chunkier side, and only accepts SmartMedia, no Compact Flash though. Still, tempting, if I could find some user reviews...

The e.Digital Odyssey 300 (SmartMedia) looks interesting, although it also looks like it's no longer available. [the Mpio DMB+ looks like the same thing]

Also, PoGo! Products has their RipFlash line of Recordable Digital Audio Players (the TRIO is one w/ mic and line in, but is not memory expandable). Uses SD/MMC... (CNet RipFlash DX review)

See Also: minidisc.org's Portable Recorders with Uploading Facilities list.

Places to buy: e.Digital Odyseey 300, PoGo! RipFlash Trio, Perception Digital Hercules (PD-095-01),

If you look at their products page, all their devices seem to be lacking enough memory. 64 and 128 megs for mpeg-4 files? Even the mp3 players they have use storage sizes that were barely acceptable 2 years ago. My ipod is maxed out at 5GB, I couldnd't imagine dealing with 128meg limit for video files.