UPDATE: Purchased an iRiver H120 jukebox/recorder.
So we're getting closer to appropriate recording solutions on the iPod 5G (with video). Apart from the drain on battery life, Griffin's soon-to-be-released (and iLounge-tested) iTalkPro looks quite promising:

Griffin iTalkPro Stereo Microphone for iPod 5G | First Look

Continue reading iPod Recording: Getting There →