OP: do you have / use a smartphone? Maybe an iPhone? If yes, why not simplify life and use it for music consumption?
Honestly, I'm surprised anyone would still use iPod these days, the same reason I'd be surprised anyone is stil using compact digital cameras: Smart phones satisfy those 2 functions perfectly, and most people have phones with them all the time, hence availability and practicality are one of the biggest assets. Why carry around 2 almost exactly the same devices? Sure, iPod is a bit lighter, and I love it's design, but still...
Regarding the storage space "issue"; you can easily decide to use most of the storage space on the phone for music, problem solved. And wifi can be ticked off anytime as well.
I think Apple is making a rational decision here. 21 years is a long and respectable journey.