I have an Iriver Mp3 player which has a similar builtin mic/ which can be switched to line-in for recording from lps etc..
Its an Iriver FP750(I believe), I bought a Sony Stereo mic (for$100 Canadian) the iriver has a built-in preamp and lets you set bit rates etc. (Ive recorded sessions, fiddle festivals etc, and the quality is excellent - as good or better than minidisc)
it is low signal to noise ratio and no moving parts, so you dont need to worry about picking up the drive motor..

(I actually got it because a someone came to our session with one, and had the same Iriver/sony stereo mic combination - which Ive seen quite a few people using elsewhere. He recommended against a powered mic as it is more trouble, and because it has a builtin pre-amp)

Im happy with it, Ive been using it a lot, for recording tunes at sessions, or workshops or just transfering recording from lps, tapes to mp3..
(it cost around $150 Canadian, 6months ago and is probably around $100 now, I only wish I got the 1gig instead of 512mb - but It worked fine for a week at fiddle tunes. )
And you only need one AA battery.