I just picked up the first album by Emma Burgess, an L.A.-based singer-songwriter. It's called Swim. It's very folky, and her voice reminds me very much of Mazzy Star. It's a nice chill out album.
I got it from an online music shop I just discovered called Amie Street. It's an interesting concept--albums start out as completely free, then as users rate tracks, the tracks and albums go up in price. Single songs never cost more than 98 cents. As you recommend tracks, you can get money put on your account. I'm still figuring it out, but I like that they have the sort of newer artists that iTunes probably won't have for a long time, if at all. Another nice thing is that you can preview 1:45 of each track, so you have a better idea of what you're buying.
Everything there is iTunes/iPod compatible; when you buy an album, you download it as a zip file of mp3s.