From what I've heard, there's a special processor designed for decoding only mp3, aiff, and wav. However, I think there's some other sort of processor inside that may be able to be used via the software to do other decoding, if it's powerful enough. You may want to check out www.ipodding.com, I believe they have a Take-apart guide with more info on what does what.
dricci- although it sounds more grammatically correct your way, it's www.ipoding.com ...
And... what the heck is ogg compression? never heard of it.
And I don't know that anybody could hack ogg compression software into the iPod. I bet it's going to be really hard... but, I'm sure if there's enough demand for it, Apple will add it. Apple added support for contacts.
Anybody also notice that the more updates iPod has gotten, the longer it takes to start up? Kind of annoying, but that's to be expected...
