Don't know much about ipod's, so how about an alternative.
I have a Matsui, cheap and cheerful with pretty good sound quality using £2 headphones from Argos.
Only problem is you can't browse by folders so I have it set to random play rather have to scroll through 15 or 16 albums to hear Zappa.
A big advantage is it plays WMA files which means I can store a lot of music at 64 kbps on my 512 meg.
click here for an idea of cost etc.