The iPods were old, and of course, there were a lot of refurbished parts left over that even made this del possible. They were some of the best selling devices at the time, and they needed those parts for warranty reasons.
The whole point of the program was to give people devices with non-exploding batteries that could one day cause your drawer, closet, or wherever you leave your old devices to rot to catch fire. Not to give you a working device that could be used on a daily basis again.
They're going to give you a 6th, but just to be kind because they know you've moved on from that device, and it's to meet the demands of a lawsuit, nothing more.
And yes, those old iPods had issues eventually. But honestly, they are 7 year-old devices, what did you expect? If you think they aren't going to die on you, like they did for some people in the first year, then you're very mistaken.