Plus, I can store a lot more songs/video on my iPod. For people who have a ton of music, or want to have a decent amount of portable movies and iPod or other media player is still the way to go. Yes, there's youtube and mobile apps, but then there's the battery issue that you brought up.
Another problem with streaming apps is they require a connection. I fly alot, not airlines so much but mostly by myself in small general aviation aircraft. Now sometimes I can get a connection down low but most of the time I want to be higher so I can ride more favorable winds. I know airlines are starting to have on-board wifi but I have never seen it to be free. I love my iPod and it is great for flying because I don't have to worry about a connection or listen to ads.