I haven't changed anything and my albums are gapless on the iPod. It really depends on what you are listening to, for example your average pop album has gaps at the end of songs of a few seconds, try a dance album that mixes songs into one another then you will see that gapless playback is working.
I found some songs on my iPod that gapless (concert CD's). Very cool!
So this seems to work--my questions is: I have some CD's where a couple of the songs on the CD should be gapless, but iTunes didn't seem to pick up on it. I tried to select those songs and checked "Gapless" in the info for them, but they still don't seem to play right. Any ideas?