http://www.apple.com/batteries/
explains the life span of Lithium-ion polymer batteries.
http://www.apple.com/batteries/ipods.html
explains in more detail about ipod batteries.
to quote the link:
"Charge Cycles
A properly maintained iPod battery is designed to retain up to 80% of its original capacity at 400 full charge and discharge cycles. You may choose to replace your battery when it no longer holds sufficient charge to meet your needs."
http://www.apple.com/batteries/replacements.html
"Apple offers a battery replacement for $49 (iPod shuffle)"
Apple also offers AppleCare
http://www.apple.com/support/products/ipod.html
for $39.00 apple give you two years of coverage on the Shuffle, Battery, Head Phones & Cables. (dose not cover damage) As well as phone support.
Every re-chargeable battery has a limited life span. Allot of the recharge-able mp3 players on the market only do 300 cycles vs the 400 you get on an iPod.