From Wired How-To Wiki

Apple updates its iconic and best-selling iPod touch on a yearly basis. Whenever a new version is released, there's a predictable stampede to upgrade to the latest and greatest and the best guess is there have been upward of 60 million units sold. The first-generation model was introduced in 2007 and while subsequent editions have kept the basic form factor, the hardware has been continually improved over the years, adding Bluetooth support, greater storage capacity, increased RAM, a more powerful CPU and GPU, 3-axis gyroscope, high-density retina display and a front-facing camera.

Here's the dilemma. When a new, killer, iPod touch is released and you're jonesing to plunk down your hard earned cash at the local Apple Store, what do you do with your current model? While an iPod touch is much less costly than an iPhone, it's still worth anywhere from $230 to $400 (a fair chunk of change) and simply retiring it to a junk drawer seems wasteful. Selling it can be a pain and every time a new model is released, used versions of the previous generation take a hit in terms of resale value anyway.

Many people who are habitual iPod updaters have realized that the iPod touch is the perfect hand-me-down gadget. Although the first-generation device is incapable of running the latest iOS version, lacks a camera for FaceTime or snapping photos and the 320 x 480 display seems underwhelming compared to the current 960 x 640 retina display, it's still a capable multimedia device and portable gaming system — heck, it'll play Angry Birds and a lot more, not to mention movies and music. Rather than haggling with bargain hunters on Craigslist, gifting your iPod touch to someone (your kid, a younger sibling, parent or a lucky friend) gives you a Karmic boost, lets you feel all "green" and environmentally responsible and, above all, lets you buy the shiny new one without feeling guilt. Before passing your former favorite gadget to a lucky recipient, there are a few things you can do to spiff it up.

Reinstall the OS

After years of installing iOS updates and constantly adding and removing content, your iPod would likely benefit from a wipe down and re-install of a clean operating system. The process is pretty straightforward. Hook your iPod up to your computer, launch iTunes, select the device and choose the restore option, which restores the iPod to its default factory settings and unregisters it from your iTunes account. This wipes out all the content you've loaded on it and prompts you to give the newly restored iPod a name, such as "GiftPod Touch." When the lucky recipient first hooks up the iPod to a computer, he or she will be prompted by the setup menu in iTunes, just as if they were hooking up a brand new device.

To wipe down your iPod touch and restore it to factory settings, select the device in iTunes and click restore. There's no going back so make sure you're ready to have the iPod's contents wiped before you hit that button.

Clean the Glass

An iPod touch — as the name implies — gets touched a lot, making it a magnet for fingerprints. Spray eyeglass cleaner on a micro cloth and give the entire device a good wipe down to get rid of the grunge. Never spray the solution directly onto the device and don't use paper towels or you'll be picking paper bits out of all the crevices afterward. Once the surface issues are accounted for, the iPod's glass display may still look worse for wear. If you have deep scratches or chips in the glass, there's not much for it. Minor scratches, however, can be buffed out if you're wiling to put in the time and effort. There are commercial products that claim to easily remove scratches from glass, but most seem to fare poorly against the tough stuff Apple puts in an iPod touch display. According to the interwebs, Cerium Oxide is your best bet. Add water to the powder and apply a slurry of the stuff to the scratched up screen (not too wet), grab a rag and start buffing. Expect to spend an hour or two at it.

Pro tip: A felt buffing pad mounted to a power drill makes the elbow grease part a lot easier.

Skins Are In

While people often work to keep the glass front of their iPod touch intact (smudges notwithstanding), the back is often neglected and the shiny metal scratches easily. The metal gleam makes those imperfections stand out even more. You could try polishing it (Brasso is often mentioned as a possible solution if you're willing to put hours into the project), but an easier option is to buy a "skin" and cover it up. I make frequent use of Gelaskins, a company that offers hundreds of cool skins (including Marvel superhero and National Geographic licensed versions) that are easy to apply and easy to take off. They cover the scratches, add a cool, customized look, and they provide a little bit of protection.

Instead of looking at a shiny metal back that's covered in scratches, slap on a Gelaskin or other "skin" product to add a custom touch while hiding the wear and tear.

Cases Are Your Friend

An unprotected iPod touch can get a little worse for the wear and the edges often take a real beating —chips, scratches, dents and other defects that are tough to fix.

One of the cool things about Apple always futzing with the iPod touch (unless you are an accessory manufacturer), is that every new model means a new round of accessories, especially protective cases. And that means that as soon as the new model comes out, you'll find cases for previous generation models selling for pennies on the dollar on eBay and at discount stores. Wrapping a used iPod touch in a new protective case adds a touch of shiny newness to a gadget while hiding some of those scratches and dings it may have suffered over the years. I picked up a new clear protective case for a first gen iPod touch that originally retailed for about $30 for only $5 on eBay, and that included shipping. With the combo of a skin covering the back and the clear case, the iPod looked pretty fancy.

A protective case looks like you care, but does double duty by effectively covering up the worst of the dings. Because the iPod is discontinued, you can pick up a new case on the cheap.

Battery

An iPod touch lacks moving parts that could wear out (unlike, say an iPod classic that rocks a hard drive), but the one component that will eventually need replacing is the battery. Whether yours does or not depends on age and usage patterns, but if you don't get more than a few hours of play time out of a full charge, you might want to consider being super nice and installing a new one before passing your iPod to someone else. Apple will do it for you ($79 plus shipping), however if you feel brave, you're handy with a soldering iron and you don't mind voiding any remaining warranty by cracking the sealed device open, you can pick up third-party replacement batteries online for 15 or 20 bucks. Somewhere between the two price points, most major cities have a shop (often located near a college or university) that will replace it with a third-party battery for you, and you can also find similar services online.

Earbuds

if you wanted to offer up your old iPod touch as a totally bitchin' gift or hand-me-down, you'd spring for some nice headphones or higher quality earbuds to go with it — pretty much anything sounds better than the white earbuds Apple includes. If a new set of is beyond your budget threshold (or the intended recipient isn't worthy of the additional expenditure), you can still earn some points while scoring yourself a new set to go with your new iPod. Here's what you do. Buy your new gadget first, along with the upgraded, audiophile-quality headphones you've been drooling over. Toss the used earbuds that came with your last iPod. Really, after even a few months the white rubber and plastic starts getting pretty grotty. Pull the new white earbuds —fresh in their plastic wrap— from your new iPod's box and include them with the old model you're donating. They may not sound great, but they'll look perfect. You can justify upgrading to killer new cans while the recipient of your old iPod enjoys some shiny white newness.

No one is going to complain about a free iPod touch, but really, your used earbuds are kind of gross. If you can't replace them, at least untangle them and wipe them down. And don't be hurt when the recipient immediately replaces them.

Original article by Brad Moon, Wired.com.