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I hook up my iPod all the time at home to speakers. Since I try to keep most of my electronics really portable (I travel a lot), though, I found a set of compact speakers through, of all places, the Museum of Modern Art.
For about $35 USD, I got a pair of tiny speakers that can be used with my computer, a CD/DVD player, iPod, digital recorder, and countless other electronics.
It was a good investment for a set of speakers I can use at home and on the road, particularly since they're only about 2x3x1 inches when they're folded!
You can spend $$$ and get a speaker set made for I-pods, or if you are frugal like me - I had some fairly decent pc speakers laying around - and I plug them in and plug it into my mp3 player. It's not great - but does the trick for me.