difference between ipod models in sound quality ?

Contrary to the above posters, I have a 4th gen 20 Gig model and enjoy it very much.
I use the amazing Koss 35 clip on earphones (discontinued).
I save music @ 192 kbs.
Sounds great for portable use.

No it is not the same as my rig at home, but if that is your criteria, then you will be disappointed.
You can always save music to the IPOD at full CD quality if you wish.

A key to decent sound is decent aftermarket headphones.
I have not heard there is a significant difference between models.

Believe it or not but iPods are the future of a desctop digital components.
In pro audio it's widely being used with great success.

I have a 3rd generation 40Gb iPod and play classical music at 320kbs through Etymotic earphones. It is good enough for my commute, but it doesn't compete with playing a CD through my Sennheiser 600s.

I am not sure I would ever want to connect it to my home system, but it is a fine sounding portable player where the headphones and external noise are the worst impediments to a joyful listening experience.

I always play at reasonable levels to protect my ears and am amazed when I sometimes hear other peoples personal music louder than my own music. The - universally young - guys are unlikely to be hearing very well when they reach my age!

Its funny but I have a SOTA home syatem and I find myself using the ipod more and more. I think the sound is outstanding really, that is, with a great set of ear buds or phones and with a good micro amp. I guess to me its music first and the ability to have a couple thousand of my favorite songs with me no matter where I go is what its all about