Seriously consider the iPod. Support for other formats is not necessary if you're encoding your own music from your CD collection, or purchasing music via the iTunes Music Store. Plus, all your MP3's will work automatically with the iPod, no changes necessary.
The only case you will have problems with is if you have only a digital copy of a song in an unsupported format, and no original CD with which to rerip the song. But if that's the case... purchasing a replacement via the iTunes Music Store should be a cinch, and you get the cover art with it.
You can start off light with the iPod Shuffles, or go for an iPod mini. You could even go for a full size iPod, which would give you more than enough space for music, files, and your favorite photos of your family (which you can view at any time on the color screen).
Can you load both AAC and MP3 files on the iPod simultaneously and it play them, or can you only have one codec on there at one time?
As I said, I've heard that when you encode into AAC with iTunes you get really good results, but I've also heard that their MP3 encoder, for when you want to use iTunes to make an MP3, isn't very good at all.