I have to say, I really love listening to music when I ride. I find it really puts me in a zen-like groove, and drastically improves my proverbial *flow*.
That said, despite liking it, I never ever ride in traffice with headphones. I'm thinking about rigging up a speaker that can attacth to my Chrome strap though, as it's right by my ear. I think that might work, without blocking dangerous amounts of peripheral sound.