I'll just clarify what Westside guy is saying about the resource fork:
The resource fork stores things like what program should be used for opening the file it's associated with. In a really dumb way, it's kind of like the extensions in a filename on a PC (.doc, .mp3, etc).
So you can transfer files between Mac & PC without much hassle...but when you're transferring from Mac to PC, you just have to remember to put the .extension after the files you're moving (so name your documents *.doc if you want to open them with Word for example.) Coming back the other way isn't so bad, as the mac makes a guess at the program you need by looking at the PC extension. You can still assign a program to open the files with by changing the options under 'Get Info' (in Finder's file menu).
Someone may be able to correct me if I'm wrong on this, but I think that all that happens when you copy Mac files to a non HFS drive is that the resource forks become visible - so you end up with a load of folders with names like Resfork.000 or something, and that if you copy them all back everything works out fine? Been years since I did this, so I can't remember.
Ok, too much info maybe. The upshot is that, yes you can use the 'pod to transfer files to and from your Mac & PC (and although the stuff above may seem a bit of a chore, it does work pretty easily in practice). You will have to reformat the 'pod's drive to Fat32, and so you will have to restore all your contacts/music/etc.
The way to do this is download the iPod Windows updater from Apple, plug your pod into the PC, then run the updater once the pod shows up as a drive. I did this with my 10Gig pod when the first windows pods came out, and it worked fine.
However, I have since changed it back to a Mac formatted ipod, and I find that many of the glitches I was having have gone away. It may also be wishful thinking, but i think the battery is lasting much longer now too.