I want a music player with GPS and running functionality. I think many other people do too.
Why does it have to be a watch? We put mp3 players in our pockets and strap them with armbands. I don't see much value add in making these 'watches'. I have a watch. It just needs to tell time. If you want to 'bluetooth' my GPS pace up to it then fine, I'll take it.
I've been running with my GoGear in my pocket for years. I have some nice free apps for my phone, except my phone is too big. I just want a functional music player with the running apps on it. I'll figure out where to put it, and I can look at the data when I'm done.
I think connecting to a simply watch display keeps the package small and allows you to use it as a 'watch' even when you're not running.
I also use headphones for music. Swinging my arm with a chord attached doesn't make sense, and wireless headphones don't have the same sound. I understand what I'm saying isn't for everyone. However, if you use your product and sell one without the band I'd be more likely to buy it.