I also think it depends on the kid. My kids hate anything with words on it tshirts have to be plain, backpacks cannot be monogrammed, etc. apparently it takes away the cool factor for them.
Ipods are banned at our school, so we have no worries about someone stealing one from them there. They use their Ipods around the house, at the pool, or walking to a friends house, that sort of thing. Fortunately no one has lost their Ipod. We went from the Minis to the Nanos and it cost me next to nothing to upgrade since I was able to sell their Minis on ebay. I personally have never wanted to upgrade, I love my pink Mini, but they wanted the video feature from the Nano.