I think a key is knowing when to stop going overboard on playlists.
I used to have 6 main ones (and a few specific ones that were easy to remake) but then eventually got it down to one major playlist and shuffle. It takes a long time to make it, but once it's done, I save it on my Itunes, so that if I ever get a new Ipod, I can just transfer the playlist over.
If you find yourself needing dozens of specific playlists, then that might be a bit of an issue.