This, pretty much exactly, though I have an Orange Monte Carlo running CyanogenMod 9 rather than a Desire. The Clip+ cost me 24 quid plus 16 quid for a 32gb Micro SDHC card. I've never had a smartphone that had enough battery life for all day internet browsing, so why impinge it further listening to MP3s in dubious quality when a little matchbox sized thing gives me 10 hours of FLAC playback in excellent quality? And a good FM Radio (for my Radio 4 fix) to boot?
I put Rockbox on my Clip+ yesterday BTW. Absolutely excellent . My Clip+ was the second one I bought, my mum had my first one off me when she borrowed it to go on holiday and absolutely loved it. Since then I've bought one for my MIL, who loves it too. Then last night my wife hassled me for one, so I ordered another. And tonight the MIL came round and asked me to get one more for the FIL, since he'd enjoyed it too but his musical taste is different to hers. So that'll be 5 in total.
A 2GB one is under 20 quid 'refurbished' from ebay seller itstor at the moment. I think I paid about £24 for the two 4GB ones. All have been immaculate and supplied in a decent cardboard box with brand new cheapy headphones. There's no real point as far as I can see getting more than 2GB when Micro SDHC cards are so absurdly cheap. As I say you can Rockbox them for nowt if you want more audio settings than you can shake a stick at (and the ability to play Doom on a two-tone 128x96 screen ).
TBH, far from saying that smartphones make them redundant, I'd say that anyone who doesn't have one for the gym/poolside/beach/plane/train is missing out. Remember they're literally smaller than a matchbox. If you've got space for a big smartphone in your pocket you've got space for a Clip+ (or the new Clip Zip, which gives you a full colour screen in the same form factor. Wonder what Doom looks like on one of those.... ).