If refurbished iPods weren't ok, they wouldn't offer a 1 year warranty on them now would they? 🙂 Refurbished items are usually items that didn't clear Apple's QC standards the first time, and so they re-tool and re-test the unit to make sure its in working order before offering it at lower prices. Some good deals pop up, not just for iPods but also for computer systems as well. Not sure if I would buy a 1st gen when the 2nd gen has improvements over the original model. At this point it's your decision if you want to pay $40 more for external volume controls, a built-in speaker, bluetooth (once the 3.0 software comes out). Don't forget to take into account that you'll have to pay $9.95 for the 2.2 software to upgrade the 1st gen to allow you to play games and run other applications while the 2nd gen comes with it pre-installed.