Here is a highly detailed video from Podango/Apple Phone Show,
showing the process of applying the skin, and the results you get.
How to Apply an Invisible Shield
http://www.podango.com/podcast_episode/284/47134/
Honestly, this all seems like tin-foil hat type stuff to me (with the exception of applying the skin to the face of the phone). I have a rubber casing (which helps protect it against drops), so aside from the face, I don't really see myself going through all this. I just can't work it out. I have one of those grandmothers that put rubber casings all over her furniture, and we could never sit on it. The degree to which that has irked me has never quite worn off.
~ CB
The skins protect the ipod from getting scratched up, give it better friction so it doesn't fall out of your hand, and (drum roll please) adds virtually zero bulk to the size of the unit.
There's no question that cases protect the best, although cases have been known to scratch the back of the ipod to hell, and they are bulky, and they cost more....