As we all know, iPod batteries, as with all batteries, will eventually reach their expected life and will not charge to full capacity. Most people say that within 300 full charges/discharges, the battery will be at around 80%

But instead of paying Apple a bundle of cash for an out-of-warranty repair, you can do it yourself. (see Apple - Support - iPod - Repair pricing for apple's prices)

You can get batteries yourself for $20 or less on eBay or various other sites; just search Google!

Once you've got your battery, this site has some GREAT tutorials!: iPod How To Video Tutorials