Beware of eMusic if you want new and modern music. I bought an eMusic giftcard for a friend's teenage son a couple of years ago and it was really hard for them to find much music they liked because it seemed to have a lot of small label/independent artist content according to them. Maybe you can go on the eMusic website and see what kind of selection they have before you commit.
As for iTunes, like someone else said, there is an extra step to convert music from your CD's to iTunes for an iPod, but once you learn the step, it is no big deal. iPods and iTunes have a different file format than MP3's and music from CD's, that's really the only difference. It goes the other way as well, you can convert music downloaded in iTunes to a traditional MP3 format with an extra step. If you decide to do this and you need help, just send me a private message on here and I can walk you through the steps. iTunes also has a lot of tutorials that walk you through how to do stuff, and there are tons of websites where users ask questions about how to do things if you just do an online search of your question if you can't find the answer in iTunes.
A lot of the music you find on iTunes is now $1.29 per song, but you will also find music (things like additional tracks) on iTunes that you can't find anywhere else. I just bought the new Black Eyed Peas CD at Walmart, but iTunes had 3 or 4 extra songs on their version that weren't included on the CD.
And yes, you can legally copy (rip) music you own on CD to any music device you own, but you can't go giving it out to other people due to copyright laws. Keeping it in the family is fine. Good luck and enjoy your music!