The problem with Audiobooks on the iPod is that there's no way to fast forward/reverse through the recording (as you may already know).
So if you're listening to an audiobook, stop midway and listen to some music, then go back to the audiobook, you've gotta start from the beginning.
Audiobooks work much better on iTunes.
Worse for me is when I'm in the car listening to a book through the radio and hit the next track button instead of the pause button by mistake. Can't tell you how many times I've had to pull over and try to find my place.
Otherwise, I love my Ipod.
I listen to audiobooks extensively on my 4G iPod and have no problem fast forwarding. The technique is called "scrubbing". Hit the center button while the book is playing, the display changes to show where you are timewise in the book, then start moving your finger around the wheel clockwise to go forward, counter clockwise to go backward. The longer you maintain contact while scrubbing, the faster it goes forward or backward.
You can scroll through several hours of a book in a few seconds.