By allowing the store employee to take the device home, the police broke the chain of custody. Regardless the facts, a lawyer will drive a truck through that mistake.
The police didn't let him do that, the store owner/manager did. The police only got involved after the employee reported the foul images to them. The device itself is likely tainted as evidence (unless they can scientifically prove the dates on file transfers, which should possible based on iOS' sync rules), but it was sufficient for probable cause on the search warrant, where the real evidence lies.
The police did not “allow” the employee to take the device home. The management allowed the employee to take the device home. Of course, you are correct that a sharp lawyer will hammer on that point but if there is a connection to the defendant’s laptop, i.e. syncing, then that argument will likely fail while appeals will ensue.
I believe it was the gas station that held the iPod waiting for the owner to return. When no one claimed it, the employee asked to take it home. Then he turned it over to the police.
In other words, the police were at the end of the chain of custody. They could not have “broken” it. They never had possession until the end.
Now will the fact that the iPod was out of this perp’s possession factor into the case? Perhaps. My guess is that his computers at home are loaded with the stuff so it will make no difference in this case.