There has been discussion on this board regarding a case solution for the iPod photo (40GB) which leaves the bottom of the device open, for use with the included dock. This one works.
Speck Products Skin-Tight
I ordered mine and they finally shipped this week. The fit is on the juuuuust a little bit loose side of perfect, but the rubbery, silicone material provides adequate cushion against everyday bumps and bruises. It also includes a clear cover for your iPod's screen. I'm actually using the clear screen cover which came with my iSkin silicone cover, b/c it's a little thicker and fits better. The Speck one seemed a tiny bit loose, but certainly would've been usable... It's just that the iSkin one fit a little better.
The top of Skin-Tight for iPod photo is largely open, I presume to accomodate accessories such as the iTrip or others which sit on the top of the device. Since I don't use any of those accessories, the top of my iPod feels a little naked.
The killer feature, the retracting flap which allows you to use your iPod photo's dock, works exactly as expected. However, I was a tiny bit disappointed that there's nothing holding it closed in the back. There's about a 1/16 to 1/8 of an inch gap running along the seam. Not ideal, but not a huge deal. It could've been more elegant though, for $24.95
Overall I'm happy with the Skin-Tight. It's not perfect, but being able to use my iPod's dock far outweighs any of the relatively minor annoyances I have with this case.
The good:
-Nice fit
-Beveled edge around screen and Click-Wheel
-Bottom flap for use with dock is "killer feature"
The bad:
-Small gap where bottom flap meets rest of the cover
-Feels slightly thinner than the iSkin it replaced
-IMO, $24.95 is a bit steep for an iPod condom
Edit: I just had the brainstorm that the fit on my 40GB isn't perfect, b/c the same sleeve is also designed for the 60GB iPod photo. It's no doubt a compromise size... A little loose on the 40, (probably) a little snug on the slightly thicker 60.
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Note: I have no affiliation w/Speck Products. I'm just a user (now on my 3rd iPod) who had been looking for something like this and was lucky enough to get one of the first 300 shipped. Others here had expressed interest in a case allowing them to both keep their iPod protected and use the dock.