MiniDisc does indeed sound considerably better than iPod even when comparing MP3 at 320 kbps with MiniDisc SP at 292 kbps and there are several reasons for this including the quality of the later versions of the ATRAC codec itself and the fact that better quality components were used in the manufacture of MiniDisc players than are used in iPods.
MiniDisc players were effectively designed and built by companies that specialise in high quality audio equipment whereas iPods were designed and built by a company that is an expert in computing.
Many other MP3 players on the market are built very cheaply indeed and are often worse in sound quality to iPods.