How Loud is It? It Depends...
How loud your iPod can be depends on what type of headphones you use. Differences in sensitivity or impedience between headphones can create a big difference in volume, as shown in the graph below.

Different Styles, Different Hazards
Different styles of headphones have different safe listening paramaters. This is because some of the different designs are inherently louder than others. For example, the stock earbud style headphones that came with your iPod are on average 6 decibels louder than over-the-ear style headphones.