The hold switch would function erratically when the unit was warm from use... if I used it for an hour or so and the unit was warmer to the touch, the hold switch either wouldn't engage, or, once engaged, would disengage spontaneously. This developed slowly over a few weeks, then was just so unreliable that I couldn't use the hold function at all. I tried restoring it, redownloading the music, resetting it, doing the built-in disk check, everything. Nothing helped.
I filled out the online service form, a box arrived, I shipped it, and got the same unit back 8 days later with a note politely informing me that they could not reproduce the problem (and that I wouldn't be charged anything). Funny thing is, I can't get it to do it either after receiving it back! The downside to all this is that, while I got the same iPod back, it had obviously been handled without care. It looks like it got 6 months of use without a case now -- visible scratches on the screen (I had one when I sent it, now I have four) and tiny scratches all over. No biggie, as long as it works, but if I took my car into the shop for a brake job and it came back scratched, that would be unacceptable.