In terms of something being obsolete in the digital world, age is an issue. Five human years is the equivalent to something like a hundred years in digital time. So it’s no surprise that the now five-year-old first-gen iPod, though it can hardly be termed antique, can definitely be called "old."
The old (pre-recession) habit would be to toss it and get a new one, but now instead of chucking it and clogging up the landfill, you can pay about $75 to Rockbox. They can upgrade your storage space to 32 gigs and replace the battery. No word on whether they can get the scratches out though!
To see just how far we've come, check out Steve Jobs' first introduction of the Apple iPod in 2001.