The XpressMusic is NOT an iPhone competitor. Its a phone with a focus on playing music and other multi-media. Why do people say "this or that is an iPhone competitor"? I mean, this very website had an article about how the new Samsung Behold isn't a smart phone, why would the XpressMusic be one either (or is this decidedly pro-Apple website suggesting the iPhone isn't a smart phone)?
That said, the Nokia Music store currently uses WMA with WM DRM, but the PC software rips CDs into eAAC+ format. Sounds like Nokia is all over the board with what format they want to use. If it does have DRM, it will be the WM DRM format. Wouldn't be a smart move by any means, considering Amazon and iTunes both offer DRM-free direct-to-phone services for compatible phones.