Because people will crack Apple's DRM if they don't. It doesn't matter if it's illegal or not or if it's good or bad, it's clear that it happens sooner or later and if they don't want it to happen (for file sharing/RIAA reasons), they have to provide the decoders for all legit applications, thus making the use of their protected songs as painless as possible. Otherwise, it's their own fault if pissed programmers develop DRM stripping solutions that work painlessly even for the general public.
Also, IMO, they would make more profits if they opened the ipod and their music format. If their music store offers such a great shopping experience, they can sell their songs anyway, if the iPod is the best player, they can sell it with or without having a good music store... but only if the formats are open. The way they are going now is dangerous and only hurts their sales. No product will ever please everybody. The iTunes Store-iPod package deal combines the flaws of the individual products which puts off those customers who would buy songs or iPods from Apple if they could combine them with different software/hardware. It might not be that big of a problem as long as the iPod is clearly superior, but things will change and Apple is about to make the same old mistake again because they never learn.