I definately won't be spending $500 on another ipod that only holds 4gigs of music. The only time I use my ipod anyway is in my car, and it never comes out unless I'm updating music on it.
I could, however, see this catching on in cities like NY where there is a lot of walking/subway'ing (I just made up a word) and little driving. I guess this kills 2 birds with one stone?...other than that, I can't see the point whatsoever other than just wanting to be cool.