I think the reason why Apple doesn't have digital outs is not what has mentioned above but has something to do with Digital Copy Rights, iTunes downloads and the IPod itself.
The iPod and the Audiophile
Here is a good article I ran into today on extremetech about digital media and the Audiophile. I thought I would share.
http://www.extremetech.com/print_article2/0,1217,a=171815,00.asp
http://www.extremetech.com/print_article2/0,1217,a=171815,00.asp