MP3 is the file format where as IPod is a device which stores and plays said mp3 files.
Most mp3 players are harddrive based meaning they have a little hard drive which stores the mp3s and then you can play them off the HDD. A good quality MP3 takes around 4mb for a song (avg) and so a 20gb player will have a weeks worth of music if not more.
Lots of people feel that IPods are little over priced and not a good battery life, and is just a fashion assecory but then others say best thing since sliced bread.
A good alternative is an IRiver from amazon.co.uk, like the ipod it is a harddisk based mp3 player but seems to have better reviews.
Just goto amazon select mp3 players (will inc IPod coz that is an mp3 player)and just look at the reviews give you a good idea..
If you want more info help just post again...