I'm not an Islamic scholar, but my personal take on that verse is that Muhammad,pbuh,was commanded to destroy instruments that had been used in the religious ceremonies of the polytheists. Not a prohibition on instruments or music in general. +5

Well you know what religious followers are like, they choose the verses that suit them and disgard the rest. I don't think there is one single muslim wedding in the world that does not have music and, we must not forget bellydancers.... And of course there is the classical, bedouin, and folkloric music. However, it is true that the pursuit of the arts (except for the rich legacy of poetry in the Arab world which dates from before Mohammed) was certainly discouraged. What is sad is that, at the beginning of the Ummayad period there were images painted on the interior of mosques (ref. Bernard Lewis). It would have been interesting to see what the islamic world would have looked like if art (painting) had been allowed to flourish as much as poetry was.