Over at Headfi, there's been quite a bit of discussion about this (by "this", I mean 24/96 from the ipod), since, although itunes fully supports 24/96 WAV, the native firmware on the ipod does not.
24/96 is especially relevant now with so many Wadia iTransports being sold and now in the hands of would-be audiophiles. Because the Wadia bypasses both the ipods's internal amp and DAC (thus outputting bit-perfect digital); it seems the perfect medium for some the great 24/96 material now available.
The Wadia truly is the missing link in making the ipod equivalent to a high end transport. With Wadia releasing a $1500 DAC/headphone amp combo soon (shown at CES) the need for someone to develop native 24/96 support grows.
(Those that are familiar with Wadia DACs in general (they call them decoding computers) know how wonderful they sound and that ... most of their stuff is north of $6K.)
The only other portable player to support true digital out is the older iRiver 120/iHP-140, but with the release of the new Ibasso D-10 DAC/AMP (supports optical in and is the size of the iRiver) there is also a movement towards higher end portable devices with true audiophile capabilities.
If a developer were to take on this project (24/96) WAV or FLAC; you'd earn a very strong following over at headfi