I'm diggin' Kief's setup. I've tried the iPad in the waterproof case set to speaker mode but I think it was too distracting to other kiters...
No but seriously I've tried iPod touch in waterproof arm band & the headphones (h20 were the ones I went with) failed like 2-3 times in 1 season. That and the sound for some reason only worked 50% of the time.
Here is what I noticed:
1) Waterproof specific headphones tend to suck for sound quality - they seem to be giving you full audio about half the time while on water
2) The connection point b/w the waterproof bag and the headphones is a definite achilles in the setup. If anything disturbs that connection it's game over and you have to fumble with it to resolve
I like Kief's idea for 3 reasons:
1) There is no bag involved to mediate the connection b/w iPod & headphone set. So you know the connection is either made or it's not
2) The shuffle is securely held in your wetsuit collar and you can preserve the connection in there without significantly disturbing the unit during riding (armband etc.)
3) The headphones seem to be more or less normal headphones otherwise
My favorite line from the Gadget Lab article is: "You might not want to swim with them (your MP3 player is still not waterproof, remember?)"
Thanks Kief for the suggestion I am going to give it a shot