Is my warranty still valid?

Go here and enter your serial number to check: https://selfsolve.apple.com/agreementWarrantyDynamic.do

Sorry, but Apple's warranty statement does indeed say that the warranty will be void if the serial number has been removed or defaced. Here is the relevant statement in English (I have removed some text that does not apply to your question):

"This warranty does not apply: ... (h ) if any Apple serial number has been removed or defaced."

You can read the full warranty statement in various languages here:

http://images.apple.com/legal/warranty/docs/ipodisight.pdf

If the serial number on your iPod is indeed illegible, I am afraid that the warranty on your iPod is probably no longer in effect.

If Apple has refused your warranty, then sorry but there's probably nothing you can do. You can look at Apple's phone contacts list:

http://www.apple.com/support/contact/phone_contacts.html

and if Apple has direct representation in your country and you have a receipt for the purchase of the iPod showing the serial number, you can try calling Apple, asking to speak to a customer service representative, and explaining the situation. It's possible that they could do something about your situation. If they cannot, or if Apple has no direct representation in your country and works only through local distributors and that distributor has refused to honor the warranty, then there will indeed be nothing you can do.

Good luck.