Another side-effect (advantage) of the display-less design is how much it simplifies the interface to the device. With no display there is also more room left for the buttons. One of the rumors says it has four buttons, but I can see how you could create a device that had only three. One button (the largest) controls power, play, and pause (like the current iPods). The two remaining buttons are for "up" and "down." Press one of these button once and you skip forward or backward in the playlist. Press and hold the button and you control the volume of the playback.
One of the reason I see this three or four button interface as an advantage is that it means the device can be made very small, yet the buttons can remain at a size that retain ease of use. Some of the current flash-memory players have so many small buttons that I feel they would be very awkward to use (think of wearing gloves and trying to use one of those devices).
Lastly, do you really need a display? Yes, if you want to compete directly with the iPod mini and standard iPod. But, there are lots of cost-sensitive users who look at practically nothing but price. And, I think there are lots of situations where you don't really need a display. When I'm out for the day with my current iPod (walking, driving, etc.) I usually access only two features or buttons -- play/off and volume. Thus, the rumored iPod shuffle would work quite well for me probably 70% of the time that I use my iPod. During the remaining 30%, well that would be compromised, but I think some could live with that after saving $100 over the iPod mini. Also, I can see places where the iPod shuffle would go that my current iPod wouldn't, so there we have an actual improvement in music accessibility. Some of these arguments might only apply to current iPod users, but, you know a sale is a sale is a sale.
Could any other manufacturer create such a device (no display) and expect it to be successful? Perhaps not. Apple has a real advantage here. The have the iPod mystic, iTunes and the iTunes Music Store, and a rapidly growing number of Apple retail stores where the iPod shuffle can be fully explained and shown to greatest advantage. I suspect that this product will do very well.