I just went last week for my iPod Photo from '04. The hard drive was broken and there was no way to write data to it. But that was only discovered after the iPod was restored. If I had not taken it in I could've at least kept what was on there.
What sucks is I didn't even get to 20 GB on a 60 GB iPod. I was foolish to think it would last longer.
I think I'll end up trading it in for the discount for the iPod Touch. I want to wait until it gets a built in camera though. Also I'll probably go for the extended warranty since I want to use it for more than a few years.