NextWorth, an eBay store, is making a big move in used iPods. They will buy your iPod off of you to sell on eBay. While you may make more auctioning it yourself, for those people who do not have the time nor want to take the trouble it may be a great alternative.
With Apple's quick product cycle these days, such a venture is ripe to succeed. Apple just announced a 1GB version of the nano ($149), and a reduction in price for both models of the iPod Shuffle ($69 for 512 MB and $99 for 1 GB). This seems to indicate a move toward phasing out the Shuffle all together. Will those who have a shuffle migrate to the nano? Such migrations happen with every new model. I have one co-worker who bought the nano when it was first released and felt buyer's remorse when the video iPod hit the streets. And several people I know gave away their old iPods to buy newer ones. At least now NextWorth is giving such fans a way to upgrade without hurting their wallet as much.
And with Apple pushing for iTunes to hit 1 Billion songs, it needs to keep its existing fan-base happy, let alone appealing to new users.