I was about to give up on Apple until I found out Neutron was available for the Touch. Features: fully parametric EQ (2 peaking filters plus low and high shelves), customizable cross-feed, support for flac and ogg file formats, m3u playlists, streaming audio URL entry.
Two minor shortcomings: the EQ graphical adjustment is not as intuitive as some other apps (but precise numerical values can be entered for gain, bandwidth, and frequency--the shelves use "slope" rather than Q) and a 3rd EQ peaking band would be nice. If you like visual representation of the EQ curve, my suggestion would be to find another parametric EQ for tweaking then copy the settings into Neutron, or feed the output of the iPod into a spectrum analyzer. Really, once you become experienced with a parametric EQ, 2 bands and 2 shelves is at least as versatile as a 21 band graphical EQ (provided the headphones are reasonable quality).
HMike158 about Neutron Music Player