I'm capable of operating a bycicle in traffic with music in one ear perfectly fine. I can also chew gum and wave at people while riding a bike and listening to music at the same time. Heck, ive been known to talk to people while on a group ride which is apperently the ultimate in dangerous multitasking.
If your one of the special people who cant do two things at once safely, then by all means dont wear an mp3 player. In fact, you should probably stick to bike paths and stay off any street with traffic
edit: i dont listen to music while on group rides, just in case the said special people also have trouble with jumping to conclusions