It is a device that goes inline between your ipod and your regular headphones. It appears to have a mic on it, remote controls for the ipod, and a bluetooth connection to connect to your phone. If a call comes in it routes the call through the headphones and you speak intot he little blueye box that is on the headphone cord.
It says that it is compatible with the 4G Photo, 5G Video, Mini, and 1G/2G Nano.
It also has an FM tuner, and gives you the ability to scroll through the last calls you received, as well as see the caller id info of incoming calls on the Ipod screen. So if you didn't spring for the Photo or Video model you can see your call info in glorious black and white.