I've still got 3 iPods as well as the iPhone and they all still get a lot of use.
The iPhone doesn't have anything like enough storage capacity so my 160GB classic is still my main music source when I'm not at home.
Exactly; when I'm on long plane/train/bus journeys my iPod is a constant companion, as it is when I'm staying overseas for weeks or months at a time. And yes, I still like the classic, even though I have the iTouch (which is excellent, but, even now, I rarely use it for much else than music.)
Phones are usually supplied by whoever I am working with, and my MBA takes care of access to the internet, so, yes, the old style iPod is an invaluable (and much used) device, and one which I don't feel is obsolete.
Cheers