According to USA Today, XM Radio is being sued by the music industry for its new satellite radio, which has a record feature. XM's iPod-like recording functionality is actually pretty limited. Although it can store up to 50 hours of music, the service is essentially subscription-based. If you discontinue your XM radio subscription, your music disappears. The songs are also stored in a proprietary format, so there is no easy way to copy them to other devices, like your computer or to a CD.
All this fighting over music is one reason why I still buy most of my music on old-fashioned CDs. With a CD, I own the music free and clear of encumbrances. But the music industry, with the help of mostly clueless Congresspersons and Senators, is pushing us toward a time when we don't own music or movies. All we will have is temporary permission to listen or to watch, and even that may be restricted. It's one reason why Apple's iTunes Music Store is important. The good news is that iTunes has a stranglehold on the legal music download business. That also happens to be the bad news.
You never want a single company to own over 80% of any market, but in this case, we've got to ride this horse because Apple, so far, has been trying to structure digital music in favor of consumers. The iTunes system is not perfect, but it is far better than any of the other systems.
Until this gets sorted out (or not), I recommend buying mostly CDs.