The LiveScribe pen records audio surprisingly well.  Better than a digitial voice recorder I bought a few months earlier.  It saves the files on the desktop as AAC files.  Unfortunately, the iPod does not accept these files.  People in the forums have reported success though converting the AAC files to MP3, then loading those files into iTunes.  My limited trials shows the MP3 files were a lot larger than the original AAC files – but maybe it was just the tool I tried.

With the stereo headsets (with built in microphones), the pen might one day make a good podcast recording device.