YEAH!!! I have PRACTICALLY the same problem/Question so I'll ask it here! xDD
I have an iPod Video and these days it BLANKS out!! Like the screen is totally white and it comes back only sometimes when it wants!! It's doing it more often. And it happens especially after i watch a video on it!!!!

so i don't watch anymore videos that i have, but it still goes on day by day. What can I do?!

stupid iPod. i loved it with my life and this is how it repays me.
Different from the original ipod problem...
Your problem is the screen is probably loose or damaged. Could be a problem with the ribbon connector or screen itself.
QUOTE (lovefool)
sound quality
As for the original poster:
Have you tried using a different pair of headphones. It sounds like you like to crank up the music so its possible you destroyed your headphones already.
In theory there is nothing in a ipod that will degrade in terms of just sound quality. The three possible things that can degrade include the battery, hard drive/flash memory, or headphones. The quality of the music will play a big role in how it sounds... and will pretty much reproduce whatever error and limitation of the music you put in. Get some music from your friend and see how it sounds on your ipod. Then try other headphones.
Battery just wears down over time and looses its ability to hold a charge.
Flash/hard drive will wear down and will probably becomes damaged over time. With that some people will experience skipping and errors in their music. However it sounds pretty much unrelated to your problem!
Headphones if you consider is just a tiny speaker... magnet with a coil of wire attached to a cone. If you listen to it too loud, you will warp and destroy the cone and make it sound terrible.