From Apple:
Apple has announced “a free recycling program for iPod(r), the worlds most popular digital music player. Beginning today, customers can bring iPods they no longer want to any of Apples 100 retail stores in the US for free environmentally friendly disposal, and those who drop off an iPod, iPod mini or iPod photo will receive a 10 percent discount on the purchase of a new iPod that day.” (full story)
Related: Apple agrees to settlement in iPod battery class action suit