Tonight I implemented this MP3 player for my band's website using SoundManager 2 and minimal support for the hAudio Microformat.

I'm rather pleased with the way that this turned out. Thanks to SoundManager 2 I have a nice playlist embedded directly in the semantic html on the page. Javascript catches clicks and hands off the URL to a hidden Flash object embedded on the page. It degrades gracefully: users without Javascript or Flash support will still be able to download the mp3 file since it's the target of a href link and the hAudio microformat should make it robot-friendly.

Another benefit: Songbird can see the mp3 files automatically populate it's web playlist.

If you would like to implement something similar you can visit this page and view the source, or check out the examples on the SoundManager 2 Project Page.