Considering to purchase an iPod ? Why not get the iPod++ (aka iPhone) that has all the features of an iPod, plus a camera, internet access, touch screen keyboard and an excellent interface.
Lech Johansen (aka DVD Jon), who became world-famous after writing a DVD copying software, has published a hack to activate the iPhone without iTunes or the two year voice and data contract from AT&T.
Once you circumvent the iPhone activation process, the iPhone will work perfect as a touch screen iPod, email device, YouTube video player and will have Wi-Fi enabled internet access though you'll not be able to make or receive phone calls.
Add "127.0.0.1 albert.apple.com" to c:\windows\system32\drivers\etc\hosts
Download iPhone Activation Server to activate your iPhone for iPod+WiFi use.
Source with inputs from engadget