When people sell their iPods, they are charging more for them than brand new iPodas because they are loaded with music and videos. The problem is that they can retain the original copies of the music, and are most likely doing so. It's like selling a computer loaded with tons of software...legally, you must hand over all of the CDs, including copies, and uninstall the software from any other computers you own. However, they are not handing over their music CDs, or the original downloaded music files. Thus, they are selling music without the appropriate licenses and trying to hide by adding it as a free gift for a highly-overpriced iPod. It's obvious what's going on, but for now it's a technicality in the law they are exploiting.

Just my 2 cents.