I wouldn't put the iPod on hold when it's not turned on. Also, don't go by the battery indicator or unplug it when the iPod reports it's full -- indicators are notoriously inaccurate on lithium ion batteries. Do a full discharge, and then plug the iPod in for a good 3 or 4 hours, completely ignoring the battery indicator since it will probably say it's full after 15 minutes -- it will continue to trickle charge slowly after that and it needs a good long time to do it.
Once your battery has been conditioned to be charged through its
full range, its duration should slowly improve, and eventually the indicator will also 'learn' and get more accurate -- provided you didn't get unlucky and just get a bum unit.