Yeah the gapless playback works on all iPods. Works on my current 5G. iTunes has a database I believe of all the albums that are designed without gaps between songs. If your album isn't on that database you can still make it gapless by selecting the songs from the album, 'Get Info', and then put "Yes" under the gapless option -- »web.mac.com/jwsmiths/iWeb
Doesn't work on my 2g mini. I changed an album that should be gapless to gapless that was already on my iPod. Plugged in my iPod and iTunes said iPod update complete immediately. Played the album on the iPod and the same old giant gap is still there. Also I did not receive an update for my iPod when I started iTunes 7.