Your intel iMac has optical audio out through the same headphone port. The other connection that you see is audio-in (for a microphone or line-level in for recording, if you want to try that)
The optical audio out would be really good, but would require audio gear that will use that optical signal.
If you go to an Apple Store, with several in the vicinity of New York, you should be able to find a variety of connection schemes that Apple either makes, or sells. The audio out is actually of quite good quality, but you would need to have the good quality gear to use it.
And for the iPod, you can use Apple-lossless format to import files from CDs, instead of using the default, which is an MP3 compressed file, which is good, but you will hear the difference through a good-quality system, or through higher end headphones.