AAC allows for the DRM which was (until recently) required by the music companies. They simply couldn't use MP3 and make their business model work. Plus, it is a superior codec. It provides better quality at a lower bitrate than MP3. It's the next version of mpeg audio (that's why file names are M4P instead of MP3).But I see no reason why they chose to went with AAC in the first place. MP3 was the standard and by going with AAC they were just being conceded asshats. They do this often. Another example is Firewire. I bought accessories for my Ipod that only worked with Firewire. I bought a new Ipod Touch and guess what they got rid of......Firewire. This will most likely be the last Apple product I buy. I've had 4 Ipod products and 2 of them broke within 2 years.
As far as Firewire goes, Firewire is STILL a superior product to USB for doing audio/video work, as it's sustained transfer rate is higher (and constant), and for moving big files around. Back when USB was still at version 1.1, Firewire allowed for roughly 30 times the bandwidth for moving files around that USB did. Even Firewire 400 is faster than USB 2.0 for moving big files around. Firewire 800 puts it to shame. With Apple's focus on media and content, firewire only made sense. And with the iPod fitting into that ecosystem, firewire made sense on the iPod too.
I think eSATA is the way to go for storage, these days, though.