DSN, why does it have to be digital? Many people still use cassette based tape recorders because they are cheap, easy to use and students can listen and record tapes at home. If it needs to be digital for transfering to CD or putting on the Net, then you have two ways that I know of:
Mini disc recorders are cheap and you can burn them to CD. Getting a little more pricy and fiddly are DAT players, which is basically a high quality digital tape recorder (both DAT and mini disc recorders allow you to add track marks for example "lesson 1, Monday 10AM, this makes archiving stuff really easy). Mini disc and DAT both sound fine for voice recording. If you want to reveiw classes you need to find a machine with good and fast shuttle controls for reviewing material over and over. Mini disc beats DAT hands down here!
There is nothing worse than buying a machine, trying to use it, then discovering that it is not what you wanted in the first place.
I have no experience with ipods or the like, but I think you would have to down load the file on to a computer (assuming it has a mic level audio input), edit it, then copy it to CD or tape for your students to listen to. Maybe you don’t have the time to do that?
I can’t be specific about products, it all depends on your buget. The first thing you must decide is what you’re going to use the machine for. I have an old Mini Disc player I could show you if you like, this way you can try before you buy.
Hope this helps. I think someone else can help you more with the ipod question.