The iPod shows 320x240 [320x180 Wide screen letterboxed]. Why question it? It's here, that's the deal. KInd of like Spinal Tap, "why not make 10 louder? This goes to 11...."
You camera does what it does, did you question the retailer after purchasing why other cameras can take better video than the one you bought?
Geezz, more excuses. Are you trying to justify paying $300+?
Actually to be technically accurate, ViPod's specs are as follows (taken from the following URL
http://www.apple.com/ipod/specs.html):
H.264 video: up to 768 Kbps, 320 x 240, 30 frames per sec., Baseline Profile up to Level 1.3 with AAC-LC up to 160 Kbps, 48 Khz, stereo audio in .m4v, .mp4 and .mov file formats
MPEG-4 video: up to 2.5 mbps, 480 x 480, 30 frames per sec., Simple Profile with AAC-LC up to 160 Kbps, 48 Khz, stereo audio in .m4v, .mp4 and .mov file formats