Sooo...
MP4 vs. iPod.
ipod:
+
Has a "click wheel" (touch sensitive controls), by far the coolest feature.
Has good build quality
Has a cool-looking menu interface
-
The smaller and cheaper Nano can't play video and is still too expensive.
You need itunes installed to be able to use it and there are issues with using one ipod with multiple computers. There are alternatives to itunes but that's beyond the average user's reach.
MP4:
+
CHEAP!!!
There are versions with touch sensitive controls, some lighted that look like the LG Chocolate (damn cool

).
Can play video.

Easy to use, just drag and drop the music/videos/whatever.
Not made by Apple! 8)
-
Low build quality
YOU WILL KILL THE PLAYER IF YOU TRY TO UPGRADE THE FIRMWARE!
Files are sorted by date and there's no way to change that. Of course it has random mode but...
Can have their memory hacked (show higher than actual capacity and cause errors or firmware crashes).
Controls wear out after some time.
Low battery life on some models.
That's kinda it...
Now as a good player i'd recommend this:
http://mp4nation.com/products/index.php?PID=m6b The Meizu M6. No need to say more...
Or for a cheaper one:
http://mp4nation.com/products/index.php?PID=C290
Those players will kick the butt of any ipod.

Both Meizu and Teclast offer free and proper firmware updates, which fix bugs, maybe add new functions, but never kill your player.
Attempting to upgrade the firmware is perfectly safe on those, but HIGHLY DISRECOMMENDED on no-name players you find on ebay.
If you don't like the players above i'd recommend a brand-name player anyway for quality assurance. In this order, from best to worst:
Meizu > Teclast > UXCell -
www.uxcell.com > Onda > RAmos > Hacha > other ebay stuff.
Stay away from Actions chipsets (players which state they can play AMV format videos), as they are SLOW and buggy. Get a Meizu or a Rockchip-based player, brand names such as Teclast are best.
Happy hunting!