i know this is a relatively old post, but i came across it myself when looking for info about this problem, so thought it would be a good place to put an update...
i just wanted to share some new info with anyone who already owns, or is thinking about getting an iaudio 7 - there is a new firmware release - 1.18 (go here:
http://www.cowonglobal.com/ to get it) - which fixes this particular problem (the vorbis distortion).
it was a significant problem for me (as my music collection is predominantly in ogg-vorbis format), but i didnt find out until after i had purchased the player. to be honest, i couldn't find another player which ticked all the boxes for me that the i7 does, so i was pretty peeved, and loathe to start the hunt for an alternative, so i emailed cowon support (as many other people have probably done too) and got a few replies, the last one being a few days ago, saying they were releasing a fix
i have now downloaded it and tested it, and can confirm that it has resolved the distortion-caused-by-low-frequency problem. may i say... "woohoo!"
(any eagle-eyes out there may spot that i pasted the exact same message in a couple of other places... didn't think it was worth re-typing it in different words, but did think it was info worthy of mass dissemination...
)