If someone is wearing an MP3 player (I don"t like iPods), and they can"t hear what"s going on, they deserve everything they get.
I often have an MP3 player when I"m playing in longer events, but only have one ear-piece in, and only have the music on quietly. It helps me focus, and like Gordon said, can reduce distractions away from the table. Although at the G casinos, it"s ear defenders that are required to block out the "singers" they have...
Another thing that Gordon mentioned was that you can "pretend" not to be able to hear someone. Same as shades, I think the biggest benefit from using shades is that people don"t know what you"re looking at. If you"ve got shades on and headphones in/on your ears, you can be intently studying a player without them being aware.