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If you think about it, 1.99 would pretty much cover the cost of the bandwidth to download the TV show . The videos are encoded in h.264 with 128kbs audio (from apple website). I don't think its ridiculous, especially if they happen to leave the ads out (ads in is still fine, Fast Forward is a great feature).

iPod Nano did get recalled because of faulty screens. Don't know the details on this though.

edit: article on the quality of the Ipod videos.
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