It seems that the MP3 player has almost completed its evolution, gotten as small as possible, and has nowhere to go except cheaper.
This cannot be allowed to happen! Evolution for its own sake must continue --- PANMusic is the smallest system I can envision.
The Personal Area Music system consists
of two or more small clips that attach somewhere on the ear. The interface is worn (or painted) on the thumbnails. Loading and unloading of content is done via wi-fi. Power is handled wirelessly, either through wireless recharging or wireless power. (Where the music is stored almost doesn't matter-- I propose a variant of RAID between the nodes of the system).
The earpieces have built in microphones, speakers, and power supplies. They network amongst each other (and the thumbnail interface) in order to deliver music optimally to the eardrum and cancel ambient noise. The ear is not obstructed.
The thumbnail interface can be driven via simple gestures. For example
* Touch right index finger to right thumb to skip ahead
* Touch left index finger to left thumb to skip back
* Rub index finger to thumbnail to shuffle forward and backwards
etc.
A menu based interface could also be accessed via a handheld or desktop device. The system could also double as a telephone via voice recognition, or could interface with an augmented reality system built into your glasses...