Firstly, for the most part the version of Android (Gingerbread) works well for this device. If you want a great music player get PowerAmp from the Google Market (PlayStore - new name). It had a 10 band Graphic equalizer, Bass and Treble controls, Limiter and more. The combinations of which can be stored as named settings that can be individually applied to different headphones/earbuds/speakers by wire or Bluetooth. The sound quality of this app will leave you dazzled and thrilled.
By the way, this device does have 512 MB of physical RAM, contrary to what someone on this thread has stated to be 384 MB.
Next, about versions of Android. Honeycomb or 3.x never made it to open source and was implemented of a tiny selection of devices of which were only tablets, so lets not even consider it. Ice Cream Sandwich (ICS) or 4.x is pretty new and is just beginning to penetrate the market, It is absolutely stunning, performs superbly and spells trouble for Apple's iOS. I asked Samsung and was told that they are planning an upgrade to ICS for the GP 5.0 as well as the Gingerbread 2.3.6 found on the GP 3.6.
If you have technical chops, you can visit the below website and will find all sorts of custom ROMs and instructions on rooting your device, something not for the technically challenged. You should make sure that you fully understand all of the details before fiddling with your device. If you take the plunge, make sure that the ROM you want supports the hardware acceleration for the GP 5.0.
For example I have a Motorola Xoom, which I've rooted and have overclocked the CPU to 1.6 GHz and the GPU to I believe by +25%, rock stable and running ICS months before Motorola/Google made it available for the Xoom.
The Galaxy Player Forum