Valid question. Very valid question.
The main reason is more of a comfort thing; I like Apple, I'm used to iTunes, I own a Mac...with an iPod it means that everything is integrated with Apple's machines/software, so it's designed to work properly. Other players may only be Windows compatible, and rely on crappy freeware or Windows Media Player...both of which I don't want to use.
The design of the iPods themselves are rather nice, and the interface is intuitive and easy to use. The iPod touch is the most beautiful hand-held device I have ever owned, but that doesn't mean it's without it's problems. The hardware itself is somewhat solid; the faults themselves aren't something that may necessarily cause a problem (for example, light leaks), but the problem lies in the fact that said problem can affect something different altogether - for example, allowing dust to enter the device. Also with something as 'gorgeous' looking and as expensive as the iPod touch, seeing light coming out of somewhere where you know it shouldn't be makes you feel a bit ripped off - it just looks ugly.
My LG cell phone is total crap. It's prepaid (or, as called overseas, 'pay as you go'), cost $120, covered in scratches when I've tried to look after it as carefully as possible, crashes regularly - but yet it doesn't bother me in comparison with the flaws I've suffered with my iPod, because, while LG is synonymous with somewhat favourable products, it isn't exactly to the same extent as Apple...they also don't exactly charge the premium like the infamous 'Apple tax'. So basically, what I'm saying, is yes, for the $420 I paid for my old, screwed up 16GB iPod touch I'd expect a little better in regards to the overall build quality and it's integrity over years of use. On the other hand, the alternatives are nowhere near as reliable or user-friendly as the iPod...at least not to me. It's just a shame that they don't try and step up their quality control and the integrity of their technicians - maybe they should have treated my iPod the same way they'd want theirs to be treated.
I'm just glad my 32GB touch hasn't screwed up on me yet.