The Droid clearly does not have many of the bells/whistles of a dedicated music player - but what it offers from a practical standpoint that dedicated players cannot offer, such as only one device to charge, only one device to carry, I can take an important call while exercising, etc, makes it a no-brainer decision for me.
I've been using my phone as my primary music device for years now - way before the Droid. I've also used a stereo BT headset (Moto S9/S9HD) since they came out. It's a simple, great sounding solution. PLUS, the Droid puts out the hottest BT signal I've seen yet, which allows you to stow your Droid in your front pockets when walking/running. Amazing!
Bottom line: I don't even know where my iPod is. It's been years now. For me, using a dedicated player is not practical at all.