I find this somewhat bemusing...iPod lawsuit over hearing damage. My first reaction was: "you're several decades late, mate!" I reckon they weren't listening to Mozart. Ever since the invention of headphones, and perhaps particularly with the introduction of the walkman there has been a risk of hearing damage due to having the level up too high. Many music players of all types have some sort of volume limiting system.
Perhaps the good sound quality of modern music players makes it tempting to turn up the level to enhance the enjoyment factor. I remember when I got my AKG monitor cans in 1996 and, when connected to a good amplifier, they sounded fantastic, so I turned up the level...and afterwards my ears felt like I'd been in a club.
Listening to a portable music player in noisy, commuter environments does lead one to want to turn up the volume to get over background noise. I find my Shure E4 isolating earphones to be good at blocking out outside noise (great on the plane and train), so you can listen at a lower level. The downside here is that you'd be unwise to wear them when walking down a busy street as you may not hear that wayward car until too late...