AFAIK, your iPod won't do you any good. It's unlikely they have an appropriate A/D circuit, regardless of the firmware you can install. You probably want to spend about $150 on an iRiver recorder.
If you're reasonably handy with a soldering iron, you can build yourself a pair of mics and a battery box for something like $25. See Linkwitz's schematics
here, and search the forums for Chris Church's suggested 4.7K resistor mod. A modified pair of WM-61As sound
surprisingly good, as long as you remember that they're omnis and position yourself accordingly.
If you're not that adventurous,
Giant Squid sells something close to all that, very well-made, for about $90. I'm not aware of anyone else building the mics in that price range, and Darren knows what he's doing. There's also a cardioid package, which IMO is kinda crap. The sound samples on their website are accurate.
You might want to consider
Sound Professionals, which sell a wide variety of packages, starting at probably a bit more than the Giant Squids. I can't comment on the quality of any of them, beyond what I've heard on others' recordings.
If you do want cardioids, you won't find much better than
Church Audio. Getting the mics + preamp would probably stretch your budget a little, but maybe not too much.