I seriously doubt that Apple made their iPods without an FM tuner armed with any sort of market survey data. Innovation does NOT rely on focus group surveys, and despite not being the first to market, the iPod/iTunes/iTMS ecosystem and, more importantly, the iPod's friendly UI was indeed innovative.
Apple did address the (apparent) minority by creating their own separate tuner. From my own personal use, it works but only goes to complicate using an iPod with an undesired add-on. As for any so-called inability to package an integral FM tuner in a compact package...that sort of conclusion is a pathetic joke. Look at some of the form factors of the tiniest MP3 players on the market WITH FM capability AND line-in recording; these companies don't seem to have any problems with packaging.
I've always believed that Apple excluded radio functions because that wasn't the market or direction they felt an MP3 player should go in. Sony--at least early on--didn't include radio with their cassette Walkmans. Most personal CD players excluded radio functions as well. Besides, it could be argued that FM listening (and any broadcast radio use in general) doesn't necessarily encourage iTMS usage and, more importantly, music sales.
As the iPod market matures, I think Apple SHOULD include integral radio functions in at least some of their iPods, giving consumers a choice of paying extra for the features. The naysayers can be dismissive of that segment of the market based on this lone survey's results, but considering how many MILLIONS of iPods that have been sold, that's a BIG chunk of potential profit that's being left on the table. As for my own radio use...I tend to only use the tuner on the Zune to listen to NPR in the morning. I'd listen MORE if there was AM capability (news, sports, traffic, talk radio, yada, yada). Otherwise, it's digital files the rest of the time.