Get an 8GB iPod Nano knockoff for $39.99 shipped
If you don't mind no-brand hardware, the V-Bop offers way more features than the previous-generation Nano for a fraction of the cost.
If you hold it at arm's length and squint a bit, you might mistake the V-Bop media player for a third-generation iPod Nano. They're definitely kissing cousins, at least in the looks department. But where features are concerned, the V-Bop blows the iPod out of the water.
Buy.com has the 8GB V-Bop media player for $39.99 shipped. That's a rebate-free price on a new, not refurbished, unit.
So what does the V-Bop offer that the Nano doesn't? For starters, a microSD slot--pop in an 8GB card, and you double your available storage. (Newegg has an 8GB microSD card for $16 shipped.)
The V-Bop also sports a built-in speaker, an FM tuner, a voice recorder, and a 1.8-inch screen (which is a hair smaller than the Nano's 2-incher).
Now, does it have the iPod's excellent interface and controls? Access to a content-rich online store? A huge base of third-party accessories? No, no, and no. But if you're looking for a feature-packed, Nano-like player for a fraction of the price, this looks like a winner.
Prefer to stick with a known brand? Buy.com also has the 6GB Sansa e270 (refurbished) for $39.99 shipped. It offers most of the V-Bop's features (FM tuner, voice recorder, microSD slot, etc.) and the support of a handful of accessory makers.
Whichever model you choose, you're getting an awful lot of portable-media goodness for your 40 bucks.