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Mp3 is a file format, a way to pack sound so that it takes less place in a computer memory. there are other formats that do basically the same thing. Ipods are manufactured by a company called Apple, and they can play Mp3 files. Any other gadget that does about the same but is from another manufacturer usually only gets called an Mp3-player.
Better is much a question of personal preference.
Early Ipods were prone to battery trouble, and Apple often tries to make sure that their customers stick to apple products only. Other brands are often more flexible when it comes to which accessories they can work with.
Todays Ipods for sure aren't bad, and they're very stylish.
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