Iriver finally released updated firmware! It’s about four months late, but it’s here. It says they’ve added gapless playback, but the way they describe it doesn’t sound right.
Oh well, too bad mine was stolen or I’d report on the improvements.
edit: After checking the iriver forums, it appears that after all this time the iriver people didn’t understand what people meant by gapless playback! While everyone was talking about the gap heard between tracks in a mix cd (which should be seamless, or gapless), they have added a feature to take out silence at the end of a track. There are still pauses between tracks. So they haven’t fixed anything. Oops!