It never ceases to amaze me how complex things have become today. One thing that really reinforces it is when people who you'd think would know better do something that (with the benefit of minor amounts of knowledge) seem fairly silly, like buying a new iPod just because of a corrupted filesystem.
Dare: Should this ever happen to you while you're anywhere near me, I'll buy the discarded one off you - I'll even pay you up to 50% of it's 'new' value! I'm sure you'll agree that's a great deal for something so broken you're throwing it away and buying a replacement... Hell - I'll give you 30% of the price right now, and take care of the shipping myself still cheaper for me than buying a new one here.
The ultimate irony here of course is that the corrupt filesystem came about because of a combination of MS's filesystem (FAT-32, the lingua franca of filesystems) and MSs handling of USB devices. Would never happen with a decent (ie, journalled) filesystem... The first thing I'd want to do after getting the iPod would be to reset to factory defaults and reformat it with HFS..
Update: Hrm, on second thoughts... 50% is too much for something that's probably a year or more old.. I wonder what street value for second-hand iPods is?
Also, given that it's the old model and probably at least a year old, replacing it isn't so silly after all. Definitely not something I'd do for a problem I could fix in <5 minutes, but I guess we're not all paid as much as Dare..