My son recently left his 2nd gen. out all night in the rain storm. Needless to say, we tried to dry it out with rice. That didn't work. It won't do anything. I'll called apple store in des moines and they said that they have an out of warranty replacement program. For $99 they will swap his broken one for a refurbished 2nd gen. You can also buy a refurbished fourth gen. for $199 plus or minus a couple of bucks. All their refurbs. come with a one year warranty. so next week when we are in des moines, we are going to the store to swap out. if you're going to the store, make sure you call and make an appointment at the genius bar, otherwise you'll wait for hours.
hope this helps