I am having the same experience here. I have never had a problem in iTunes. I always used the cross-fade option (set to zero).
iTunes: How to Fade Between Songs
http://docs.info.apple.com/article.html?artnum=61110
"Luckily, this doesn’t have to be a show stopper for long. All Apple has to do is modify the software so that it plays tracks seamlessly with no pause. WinAmp and other software-based MP3 players have been doing this for years, so it shouldn’t be much of a problem to fix. Hopefully, if Apple fixes this, they’ll also fix this behavior in iTunes." - by James Duncan Davidson on 11/28/2001
Music Playback: Gaps Between Tracks
http://www.oreillynet.com/pub/a/mac/2001/11/28/ipod_review.html
What I find interesting is in the announcement Steve acted as if this was an industry breakthrough. no so, at lease not from what I have personally witnessed. My Creative Nomad jukebox 3 can handle cross-fade (remove gaps), and had two 11hr batteries (22hrs total). It also has digital optical in for recording in better than CD quality.
I love my iPod, and Apple even more, but this is hardly a breakthrough by any measure.