I've never had any problems with iTunes, iPods, iPod sync's, or with iPod's playing on HU's. I've dealt with Alpine, Pioneer, Kenwood and that's about it.
It isn't a monopoly, nothing else is as innovative and user friendly as the iPod and that is why it has remained on top.
Despite what you think, the transferring music to friends is next to worthless. If you download songs illegally, which many people do, then it's worthless. If you buy songs you are probably not in their target market, which renders it a feature worthless to many.
I can't speak for the quality of the Zune and others, as I have only used them as prospects and never owned, but just today we found a shuffle in my driveway that we ran over with our Yukon XL and it still works. I own a 30gb iPod from Christmas of 2005 and it still works flawlessly in every aspect. I have dropped it on cement from 3-6 feet more times than I can count and have never had a cover on it.
Also, many people get frustrated because their iPod locks up or freeze's all the time. This is remedied by simply pressing menu and the center button for 5-10 seconds. Followed by 10-15 seconds of iPod restart. After having my iPod for nearly 4 years, I feel like waiting 20 seconds for it to restart occasionally is the least of my worries.
To each his own though.