This may change soon. First, people buy fewer and fewer iPods because every phone provides a music player nowadays. Secondly, Android phones may play a "reverse" halo effect. iPhone benefited from the iPod user numbers. Now Android players may become popular because more people have Android phones than iPhones.
I general, vertical integration is a bad thing. Let Amazon sell music. Let Sony and Apple manufacture phones and players.
Nah, vertical integration isn't necessarily a bad thing. It's actually quite a good thing from a user-experience perspective (when done right). It becomes a bad thing when it means that the only supplier you can work with is the supplier who provided the vertically integrated stack, and that's not the case with the iTunes -> iPod/iPhone stack (and never has been). Even with iPhone apps, where you can only go to one store for apps, you've got a wide selection of apps from a variety of suppliers.