I set my 3rd Generation 10 GB iPod on top of my car this morning after pulling into the garage, because I needed to take the recycling bin to the curb. In my clumliness, when retrieving the iPod, my leather-bound Sony Clie TJ-25 and my glasses case, the iPod tumbled to the cement garage floor. Luckily it landed flat on its back.
In short, it works just fine now. It was in a DLO Jam Jacket, which may have absorbed some of the shock. The JJ is very thin and I bought it just so I wouldn't scratch the back of my iPod and soil it with oily fingerprints, but it's just paid for itself tenfold.
I imagine the outcome would've been different had the iPod fallen onto one of its corners, or face down onto the LCD screen. In any case, I just thought I'd share.