"There's usually a fair number of headaches in the electronics too, particularly if you have want to
- maintain low power
- keep noise inaudible in the analog section in a tiny circuit"
I don't think so, its mostly a matter of selecting the best "system on a chip" and flash memory that is currently available from the semiconductor industry, Apple doesn't design that, so you get whatever specs the chips give you, the shuffle uses the STMP3550 which has MP3 decoder, usb controller, DSP,playlist manager, headphone amplifier and a variety of storage media support among other things.
"Otherwise, this would be a pretty straightforward exercise: build a set of tight specifications, select major parts (microcontroller, memory, battery, probably a codec), design a basic firmware architecture, start
building modules and testing... "
I was referring to the mechanical design, not the electrical....