After the last iPod update, iPod Updater 2005-03-23, I noticed something I have been asking Apple to implement for ages.
There is a new setting in the setting menu, Compilations. If you turn it on, magic happens.
1. Artists represented solely on compilations disappear from the artists menu, making the list a lot shorter and more manageable.
2. There is a new music submenu, Compilations, which lists all albums containing songs marked with the Compilation checkbox (akin to the Group Compilations When Browsing feature in iTunes General preferences).
The iPod now corresponds to iTunes with regard to compilation management, very important for some people like dance music junkies.