I recently learned about the JVC SU-DH1, a portable surround decoder that implements Dolby Headphone and Pro Logic II technologies. The demos for Dolby headphone at Dolby.com are pretty impressive, since you get a surround sound experience through any set of headphones. Pro Logic II is a technology that takes any 2-channel signal and converts it to a 5.1 surround sound experience. The combination of these technologies seems to me to be very promising for portable listening devices. iTunes movies are encoded in Dolby Digital surround sound so such a device would give a listener a surround sound experience while watching movies on a video iPod. Other applications could be using it for a virtual home theater without having to purchase an AV receiver or set of home theater speakers. I'm sure there would be even more instances where a surround sound experience could be used with a portable decoder like this.
I have found a few gaming headphone sets that implement the technology, but the JVC SU-DH1 appears to be the only portable device that does not include its own headphones. I'm actually in the process of ordering this for my own testing purposes so I'll update you once I've come to a verdict. I know that the device has been on the market for almost 2 years now, so I'm surprised at the lack of competition that it has. If anyone is familiar with other such portable surround decoders, I'd be interested in hearing about them.