I've been using my ipod for years and finally took mine in to get a new battery
(preemptive maintenance. it was still working fine).
Rather then mailing it off I took it to an Apple store.
I heard that the battery replacement would cost around $59.
I went in and explained what I wanted and asked how long it would take.
They guy at the genius bar ask if I had my files backed up (Yep).
Did I have every thing off this one that I wanted (Yep).
So he takes my old ipod, reaches under the counter pull a new one out of a box
and hands it to me. Then taped his ipad a few times. I signed and we were done.
That's how the Apple store "installs" a new battery.
I suppose that you can crack open your ipod and install a new battery yourself.
Not sure if they do this for all models or at every store. Maybe I just got lucky.
Personally I like the "here's a new ipod" approach to battery replacement