Q: I would like to find a media player that has the music features of an iPod and a decent screen, but also with built-in FM radio. Is there such a device?
A: In fact, many players now on the market can fit that bill. Models from Creative, Samsung, SanDisk, Sony and others feature color displays rivaling those found in the iPod Classic and the iPod Nano, along with built-in FM tuners, so you can listen to radio as well as saved music. Microsoft's Zune, a direct competitor to the iPod, also sports onboard FM.
Why Apple hasn't seen fit to fit an FM tuner into its iPods is unclear. One possible explanation: Why let people listen to music for free over the radio when you can force them to buy it on iTunes?
I think that the comment about forcing people to buy music on iTunes is right on the money. Apple's marketing strategy with respect to online music is very much about using its dominance in the online sales market (via iTunes) to leverage iPod sales--and vice versa. I am not sure how many of the other major manufacturers of MP3 players are integrated with an online sales service the way that Apple's is, but if any are, certainly nothing else in online sales has the dominance that iTunes has. Since Apple's iPods are so coupled with their online music sales--one exists to support the other--Apple has a vested interest in using iPods to help promote iTunes sales.
That is one reason why, just on principle alone, I own a non-Apple MP3 player. In any case, having an FM receiver is one of the things that I specifically look for in a player.