It's possible that Fiona doesn't know what you mean. I don't.
However, I wonder if you mean the small circle (that isn't metal) at the top of the screen.
That's a camera.
The only thing at the bottom of the iPod is the Home button - there's nothing underneath it. You can see in the picture, a recessed circle with a printed grey square inside it - the Home button.
(I have noticed that pictures of the 2nd gen Touch - which I own - do not show the small (also not metal) circle at the top left above the screen. It's a light sensor.)
So if your iPod does not look exactly like the one in the picture, can you post a picture of yours, with this small metal circle thing too?