It is simple. Normally for iPod, they will just replace a new one for the end user. I did send a lot of spoilt iPod which is still under warranty to Apple and all my customer get a brand new unit. Not too bad. Anyway, just buy Apple Care if you are planning to keep your iPod for a long time.

Well, again from my experiences, Apple care nothing bout it. If they are lazy to deal with it, they will just throw a new unit to the end user. The old one, they will wait for the parts to be available for the repair. Then they will resell it under "REFURBISH UNIT"