It's definitely more fun to kiteboard with music. I've had my waterproof IPOD nano housing from www.h20audio.com for several months and have gotten good use out of it. The case ($79.95) is tough and durable and has proven to be water tight. The earphones (that retail separately at $39.95) need some work though IMHO.
While kiting is definitely better WITH music than without, the silicone earphones, while definitely waterproof, don't have the same sound quality as standard earphones -- so build that into your expecatations before purchase.
I also think that the cord should be longer. The cord is designed to be used with the IPOD housing attached to the wearer's arm - thus it's short. I attach mine to my harness -- placed there, the cord is always 'tensioned'. The wire is thin, and not that durable. After a couple months of use, short circuits developed inside the cord due to flexing at the joint where the headphones attach to the water tight case.
To fix these problems, I ended up making modifications to my headset by buying a 3.5mm stereo plug extension cord from radio shack, cutting one end off and soldering it to the 'good' part of the H20Audio headset cord. This was followed with layers of teflon tape covered finally with plastic heat shrink tubing for a water tight seal.
Now there is no stress on the cord... hopefully this will last me a while. Net net, having one of these is definitely a plus and i'm sure the product will get better and better over time.
New on my kiting playlist: