There are two different applications to consider here - home and portable use. As a portable music player, iPods and mp3 players can sound fantastic when music is stored at a good sample rate and you use a good pair of portable headphones - way beyond the sound of most bulky portable tape players of the 80s and 90s , minidisc and in many ways is more practical than a portable CD player if you're walking etc. I remember the effort required with portable tape players and a good mp3 player is a godsend in this respect.
Whilst vinyl is still a wonderful and viable format (if recent increases in retail figures of vinyl sales are anything to go by) that can sound stunning on a good set-up, you can't enjoy vinyl on the move unless you record it onto an mp3 player, which may contradict the hi-fi purist argument. On the move, iPods and mp3 players do stand up well.
On the home listening side, CD and vinyl are excellent choices and we've seen increasing sales of CD players and especially turntables to customers of all ages who want a solid, high end front end. Perhaps the biggest surprise here for some is that many younger music fans are now considering a high end CD or vinyl system. While the hi-fi purist might argue a good CD or vinyl set-up will always outperform a portable player at home, we've been stunned by the sound quality possible from an uncompressed file through a good dock such as Wadias 170i or Onkyos NDS1.
In some ways, the sound argument goes back to the actual mastering process. I've heard cheaply produced vinyl that can sound awful for example, but good mastered audiophile vinyl pressings or some first pressings can sound simply stunning. The same goes for CD and portable players where the mastering quality of the recording (and the sampling rate in the latter case) has a major effect on the sound quality. Some self confessed hi-fi purist customers have even "bridged the gap" by investing in a high end turntable and then keeping a hard drive back-up of their vinyl for listening to on the move.
At the end of the day though I agree with Clare - it's a personal preference and there isn't any reason why someone can't enjoy the best of more than one format if they love music