ipods have morphed into a lot of different things: jewelry, audio recorders, day planners. This is the first time i've seen them as a pedometer. For a clear explanation of how it works view the website here, but basically a transmitter in the shoe broadcasts into your music what your speed, distance etc. are and later you can download the info into your computer and track your progress.
Blog site boingboing belives hackers will find some interesting ways to modify the transmitter.