For the best sound quality you'd want to bypass the DAC and amplifier inside the iPod by connecting it to one of the external docks that pick up the digital information directly from the drive in the iPod. Then you're getting the music at the resolution of the original file, which can be anything from a low-resolution mp3 to full CD or higher resolution. At that point the iPod is just a storage device with an interface for selecting the music.
Several companies make docks, Wadia was the first but there are a number of them out there now. I haven't heard the PURE i-20 but it's fairly inexpensive and has had good reviews here.
Several companies make docks, Wadia was the first but there are a number of them out there now. I haven't heard the PURE i-20 but it's fairly inexpensive and has had good reviews here.