Encyclopodia is an open-source project that wants to brings Wikipedia, which is one of the largest encyclopedias on the world, on the Apple iPod MP3-Player.The English version has about 753MB and it should work if you have an iPod generation 1 to 4.
A related project is iPodLinux, a port of the Linux kernel and tools to the iPod, which is in alpha. They have successfully ported a customized uClinux kernel to the iPod and built a simple user interface. The problem is that iPods have only 32MB DRAM + 96 or 128kB SRAM (aka IRAM, fast RAM) and a CPU of 75 Mhz, so they don't have too much processing power.
Also view: What if Microsoft designed the iPod package box? (video)