Engineer Benjamin Kokes used to work for the now-defunct GPS company Nemerix. While he was there, he started working on a GPS peripheral for the iPod nano as a personal challenge. From the looks of it, he still has quite a ways to go, but at least he has shown that it’s feasible.
Kokes used “a reference design board containing a Nemerix GPS with an Atmel ATMEGA324 micro-controller” for his hack. He said that the hardware part of his project “is not at all that complex”, but then again he’s an engineer. The software portion, on the other hand, turned out to be a beast of a challenge, as he had to write a screen driver to display the information on the iPod.
Kokes also said that the device he’s working on will not work with touchscreen iPods – and Shuffles of course, because they have no screen at all.
I’ll stop here and direct you to Kokes’ website for more details, because honestly this is all nosebleeding-wizardry to me.
P.S. if you want to post about Kokes’ project or link to his site, he requests that you email him as well, just so he knows.