WIll Media Center be part of the Windows 7 release and if so will MC it work with an ipod?

first:
Yes WMC is integrated into Windows 7. I personally don't have any information about an iPod with respect to compatibility with WMC. There are no menu options, features, or settings in WMC in either the Beta or RC that specifically related to an iPod. Best guess is that if an iPod has worked with previous editions of WMC then it will most likely function with the W7 edition.
second:
I doubt that you can connect an ipod with original firmware to anything else then iTunes or other Apple programs... The ipod touch might be different, but windows doesn't recognize the iPod (shuffle to nano video) as a removable harddrive,