I follow the 90/10 rule.
90% of music is disposable trash that I just listen to in the background for a couple days or a week or two, and forget about. Napster rocks for this. I continually get a flow of new tunes, and Napster-To-Go means I can copy as many of those tracks to my portable MP3 player as I want for as long as I'm interested to listen to them.
When I get tired of the album, I toss it. Basically, I think of Napster as XM Radio, but I can listen to it on my MP3 player (ie anywhere and anytime), and I can choose exactly what I want to hear.
Napster makes sense if you normally go through at least 1-2 albums a month like this (which I do).
10% of music is actually good enough that I want to keep it forever. In this case, I'd rather not pay iTunes 99c a track for something that's compressed (AAC) and DRM copy protected. Instead, I'll just pay an extra couple bucks and buy the whole album in a store, and get the artwork, liner notes + lyrics, AND a nice unprotected physical CD (that I can rip and copy as much as I want).
So for the way I like my music, iTunes makes absolutely no sense to me. For other people iTunes is the better option.
Isn't choice grand?