iPod Interference / Eavesdropping Problems

I've blogged about problems with my iPod before and don't get me wrong, I use it so much you'd have to prize it from my cold dead hands. But my newest problem is really bizarre.

During a train journey to London recently I was slightly perturbed to witness a fellow passenger snort a large line of something or other off of the table in front of him (stressful place London, im told). This would be unsettling enough, if it wasn't for the fact he then rang his friend on his mobile and talked VERY LOUDLY about his plans for that evening.

"No problem", I thought, "I'll just turn my music up and drown him out". Imagine my surprise however, as I increased the volume on my iPod and heard an amplified version, of his side of the phone conversation, in my earphones. Ironic, no?

Initially I put this down to his use of a handsfree kit (very useful when your hands are otherwise occupied with rolled up £10 notes). However, the same thing happened on a bus journey home, whereupon I heard an amplified version of the conversation a man behind me was having with his daughter on his mobile phone.

I seem to remember that all you technically need to receive a radio signal is a large aerial, a tuning crystal and headphones. This goes someway to explaining it, but aren't mobile phone signals digital, or scrambled? How is it tuning into the signal? Why hasn't this happened with my MiniDisc or CD player?

Anyone experienced the same, or have a better explanation of this phenomenon? Is it time to sell my body to medical science and buy myself some of those shiny ER-6 Isolator earphones I've been pining after?