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There are different iPod models available:
The iPod Classic - which uses an internal hard drive to store information (all the other ones use flash memory)
The iPod Touch - which features a touch screen
The iPod Nano - which is compact
The iPod Shuffle - which is even more compact that the Nano
Discontinued models include the iPod mini and iPod photo - these are no longer available.
There's so much you can do with your iPod:
You can use it as a music player and listen to your favorite music.
You can use it to watch videos.
You can use the YouTube app to watch youtube movies.
You can connect to a Wi-Fi network and surf online or check your email.
You can use it to store your contacts and schedule appointmens on a calendar.
You can play games on it.
There are apps you can download from the iTunes store that will allow you to do a lot more. Some are free and some you will have to pay for. One of the more popular apps on iTunes is a game called Angry Birds. I personally don't care too much for this game but lots of people have gotten addicted to it and love to play it!
The biggest problem I have with my iPod is making sure my kids dont' take it. I guess they need to get one of their own as well!