Earlier quoted context omitted.
The interface just isn't as nice overall. It gets the job done, but it's not as intuitive or pretty as the iPhone's player. Also, the vast majority of people have their music in iTunes. The fact that they can't just plug in the device and tell iTunes to sync might be a turnoff
The vast majority?
Apple is has been the biggest music seller in the US for the last 2 years, it is now bigger than the next 2, Walmart and best Buy. It has over 27% of the market. Amazon is at something like 7% for digital+cds.