Actually I never heard that argument against the iPod. I heard the DRM argument against iTunes often enough but I've never heard anyone complain about the iPod being a DRM-laden monster.
That's because it's not a DRM laden monster and the distribution of music is such that there are many alternative ways to get songs you've purchased onto one without involving DRM. Unfortunately the same can not be said for books even though essentially all of the electronic books will let you put non-drm'd material on them.
A few high school friends of mine got more obscure music players because they didn't want to be forced into using iTunes. One or two thought iTunes added DRM to tracks that wouldn't have DRM otherwise.
