First off, I'm absolutely not sure about exactly how copyright law works in the UK, so take it with a large grain of salt.  But I would think mp3 players and the like could be sold because a) legal music can be bought from the iTunes store, etc., and b) they may just be differentiating between selling the player and infringing the copyright (although in the U.S., you could potentially get in some trouble for creating a device whose only purpose is to infringe).

That said, if anyone know UK law with a little more certainty, I'd love to hear it.  I have learned that fair use does not apply there, however.

boy things must get complicated in court cases involving this

yeah bring on the UK lawyers

Yup, Napster and Grokster helped out on that one...

Contributory copyright infringement:  One who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.  MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (U.S. Supreme Court, 2005)

YouTube would be in that same boat, although companies seem to be working out "backroom" deals for youtube to remove the content (replace it with 'approved' versions), rather than flat-out suing them.

Oh no no, YouTube very visibly has many non-infringing uses (user-created videos, parody, etc).  Contributory infringement is aimed at things like Kazaa, or Morpheus (whose creators ACKNOWLEDGED they were making the software for illegal music distribution).  BitTorrent would be a bit of a gray area, though even then a strong argument could be made that there are non-infringing uses (that, and bittorrent is now out of the bag and there is no one company you could go after to shut it down).

Kinda like how you can go to a movie theatre and watch a movie for free before you determine whether or not you'd like to pay to see it.