For the price question, I misunderstood. I thought you meant an LOD. No, 7th generation ipod is most certainly not worth the price. Nothing changed whatsoever. If that extra 40 gigabytes makes that big of a difference to you, thats fine, but the 7th generation ipod is exactly the same product as the 6th generation. They released it so that they could rid themselves of 2 seperate manufacturing processes (1 for 80 gig and 1 for 120 gig).
The CLAS, and HPP1 are both Dac/Amp combos. They will obviously sound better than any stock ipod, no matter what the generation. you dont use an LOD with these products, you use a USB cable. Its like connecting the ipod to a laptop, reading the encrypted song off the ipod, unencrypting it, and playing it.
The iMod is a simple analog cable that bypasses the amp on the ipods. It lets you use the ipod's DAC with an opamp of your choice. This lets the ipod control playback and decoding, but it disables the ipod's volume control and bypasses it in favor of an external amplifier.
I paired the 5g and 5.5g together because it is the exact same product, but they upgraded the screen slightly.
i pared the 6th and 7th gen together because it is exactly the same product. That is why there was no compare/contrast. If you read my lastish post on page 1 I compared the internals of the 6th and 7th gen ipods and provided links to the internals too.
To answer your question, you could buy a 5th gen or 5.5 gen ipod. I dont know the street price for these anymore and doubt you'll find one new. You will HAVE to use at the VERY LEAST an ipod LOD cable to an external amp in order to make it sound good. Stock headphone out wont terribly well. Another option is to use CLAS or HPP1, but that is VERY expensive with this option you wont need an LOD whatsoever.
You could buy a 6th or 7th gen ipod based on your needs in terms of warranty available with the 7th gen or storage/form factor/cheapness. With this, you should be fine with a simple LOD + Amp, but you can get an even bigger edge using CLAS or HPP1. With this, you dont really NEED the LOD+Amp or the CLAS or HPP1 but any of those will definately make an improvement.