I was in the process of making something similar... but I'm going to use something about half way between a pencil and a palm stylus in diameter... For an accurate stylus, I find smaller pointers make it easier to point in tight spaces...
I made my stylus out of a pencil and standard aluminum foil, and it's really cool! I noticed that if your skin is not touching the foil, it does not work. However, as soon as you so much as tap any part of the aluminum, it works. I didn't know aluminum was that conductive.
@ lensflare It doesn't really have to be really conductive.It works with almost anything that is conductive. Anyway WOW!
Uh, well, the stylus is really simple. You just stretch (more like flatten) some aluminum foil around a pencil eraser or another pencil-like tool, then tape it around so that it stays. Make sure your finger touches the foil when you use it. The dock is pretty easy if you follow the instructions. Just use an X-Acto (sp?) knife to cut out the holes, then slide the cords through the box. You can use the instructables these kind users have posted to help you.
If you have a screen shield and you dont want to scratch it up with aluminus foil scratches, you can use foil from gum wrappers, i used 5gum. it works great, and you dont have to touch very hard for it to work.
Yea the stylus workes nicely, but I HIGHLY suggest you have a screen protector. Because I stupidly wraped tin foil around a pencil "eraser side" and put tape on it. After using it for a few min I notused a scratch so I stoped using the stylus, and the next day I saw that I had accadently caused several cuts in the glass Luckally I figured out how to get rid of the horrable ranbow effect of the scratches by masking them with a full front ipod screen protector I made from a roll of generic laminate I bought from walmart. Anyways awsome find, Im just sad my ipod got scratched "also when I made the screen protector when I tried cutting out the homebutton I accadently put a gash in it so Im still kinda bummed. Anyways Im glad my screen isnt irritating anymore but im kinda sad for the home button . On the bright side the accadents were prolly going to happen eventually anyways." Anyways I thought I should warn you of the evils of foil + glass screen. XD