You can sign up at
http://www.freeiPods.com/default.aspx?referer=7232028
This is how it works, you sign up and then you have to sign up for a free trial for a service, now these free trials are from big respectable companies like AOL, GM, Ancestry.com etc. You have to use a credit card to sign up and you can cancel the trial by phone before they charge you anything. After you sign up for this free trial you have to get 5 people to sign up under you and sign up for a free trial. There seriously is no risk to signing up for this, just use a junk email address (not hotmail, they block it) because they will spam it. You wont have to pay anything to do this, cancel the trial before they say you have to pay (30 or more days, depending on which one) and you will not pay a dime.
I suggest you use the ancestry.com free trial because it gives you credit right away while the AOL one takes 1-3 days.
Again this is NOT a scam of any sort. Here are some websites with proof and pictures of people who have received their free iPods.
http://forevergeek.com/news/freeipodscom.php
http://www.engadget.com/entry/1771223899144212/
I think almost everyone on the internet is going for this deal so I doubt the offer will be available for long.