There's no such concept as "current playlist" on any iPod. You're limited to the "On The Go" playlist which honestly, seems like a completely tacked on feature. The problem is that the interface has just seen tacked on features from the first iteration created by Portal Player.

Designing both a friendlier and more versatile interface is definitely possible using the mechanics employed now for input. I doubt Apple will ever improve this to tell you the truth. The iPod interface has always been completely awkward and a slap in the face to ease of use. The product's market dominance and the lack of commitment of any other manufacturer to their own product line is all but a guarantee that the landscape will not change either.

I've never tried a Karma, but I was not at all a fan of the other Rio players (flash based) of the time. Of any product I've tried, Slim Device's Slimserver and SqueezeBox are by far the best, if not the prettiest. Empeg/Riocar close second and in fact has a number of cool features above thhose implemented in any of Slim's default interfaces (Enqueue for one).