I just did this so here is some info on my experience:
I used a ipod classic 120 gig to clone the hard drive off of a new macbook
pro.
This will work flawlessly and can be used as a bootable drive and to restore any missing files or used by migration manager to clone this info to a new hard drive.
Please be aware that if you still want to use your ipod as a music player you will want to make sure the software you use to clone your hard drive does not require an erasure of the info on your ipod. Essentially when you do this itunes will have to restore your ipod when you synch it to itunes again and this action will erase all the files you just backed up.
1. Connect your ipod and go into itunes under your ipod menu and make sure at the bottom the box that says "enable disk space" is checked.
2. Make sure you have enough space on your ipod. If you do not have enough space to clone your hard drive you can always just drag and drop files for storage or on the go computing just like you would with a usb flash drive. Drag and drop your items to the ipod icon on your desk top and your done!
3. If you want to make a full back up of your hard drive it is best to use software to make this process easier. I highly recommend Carbon Copy Cloner
http://www.bombich.com/. It is free(donations welcomed)and allows you to save the info already on your ipod (ie your itunes music and video files) and will allow you to do incremental updates as you add more files to your system. SuperDuper is great but the free version will only allow you to clone your hard drive and will require complete erasure of your ipod. Also it will not allow incremental updates which means you essential will have to burn an entirely new copy of your hard drive every time you want to update (trust me you dont want to do this because it takes a LONG time).
4. The rest is simple. Depending on the software you choose. Select your source drive (most likely you MAC HD) and select you ipod as the traget drive. Depending on the size of your files this can take usually over an hour.
5. Done. To test your drive as a bootable clone of the original, simply keep your ipod connected and restart your system holding down the option key..you should see two options for booting your system up, the internal drive and your new copied drive.
I think this is a great way to put all that extra space to use on your ipod if you can do it. Or in my case a good fix until my files get larger and I purchase an external drive for routine back ups. Always nice to have a couple copies of your hard drive for emergencies, or at least one. You can also share files with your friends if they have macs. Good Luck!