I saw a documentary once, something to do with the staff and diplomats whose job it is to organise anything to do with state visits, etc. They showed a room in one of Her Maj's residences filled with the most incredibly awful (but extremely expensive of course) trinkets every one of which was an official gift from visiting dignitaries and weddings presents. It was ludicrous- imagine 95% of your wedding, birthday and Christmas presents during your whole life were
a) very expensive.... but non-exchangeable or refundable. 
b) specifically associated with the homeland of the giver... I mean how many samovars, lacquered boxes, boomerangs, etc can you use?
c) pretty ugly.... unless you like the gold, gem-encrusted, fur-lined variety of ornament. (Hmmm... they probably do)
No wonder the rich just keep getting richer. They should auction it all off and donate the proceeds to charity (the British economy?)
Having seen the cr*p they normally receive (and in light of the world's financial problems right now), maybe the iPod was actually pretty sensible... she can at least pass it on to one of her staff. Though that might cause a diplomatic scandal.... "Regiftgate".