If you have an ipod (or any compressed file player) you're listening to inferior sound files to that of a CD. Using anything more than the standard headphones they come with is a waste of fucking money.
http://www.utopiaguide.com/forums/showthread.php?p=602261#post602261
but the summary is that I-Pods playing 128 k-bit compressed files sound considerably better than a budget portable CD player and so, imho, deserve at least a decent pair of phones.
I still use a pair of Shure Ec2's and I still like 'em with the I-Pod. Not everyone likes the in-ear design. Some people complain about fit. Still, I think they do a great job of blocking out a good percentage of ambient noise and therefore providing a more quiet background for the music. I end up playing music at a much lower volume than I would with a traditional ear bud design. I tend to think that this addresses Elmo's concern about listening levels and hearing loss, but I can't be sure since there's other variables at work besides just volume (I may still end up with high SPL's despite the lower volume since the speaker is closer to my ear drum and I've effective sealed my ear and am therefore eliminating a lot of energy leak).
I don't have a lot of experience with noise canceling designs. Philosophically, I try to keep my signal path as simple as possible and noise cancellation seems to be a very active modification of the signal. So someone should correct me if I'm wrong, but my understanding was that noise canceling phones were good for white noise. I believe they generate a wave that attempts to negatively interfere with ambient noise. The problem (strength?) with this approach is that it works best with a steady, somewhat predictable source of noise.
In-ear phones, however, reduce noise through the extremely low tech solution of ear plugs. They simply act as a physical barrier for the sound waves. As such they discriminate more on the basis of frequency then on repetition. Fortunately the things I want to block out (traffic, my officemate typing, bus chatter) all tends to be mid to mid high frequency and thus very effectively blocked by the phones.