It would actually not be that hard to make, but the problem would probably be analyzing the songs without making the iPod explode. Maybe it would be possible to do it without all the cool effects, with lower quality and with only one character (and no online capabilities, of course).
That actually gave me another idea: make a Freeride Audiosurf for iPods. They most likely won't be able to support something too complicated, so using Audiosurf as a visualizer would be good enough, at least for me.
But of course, as everyone said, it won't happen.