Can you use the $199 off towards purchasing a $299 ipod touch? Or do they only let you get certain products?
You pretty much get a credit for $199. So if you choose to get an iPod Classic ($249) or a 32,64 gb iPod touch ($299, $399), all you have to do is pay the difference.
And to those people that were sad that the iPad wasn't included in this promotion, that's because Apple does this every year to clear unwanted inventory to make room for the next generation of iPods. Currently, the only inventory problems Apple has with the iPad is that they can't keep them on the shelf long enough (or manufacture them fast enough).