I figured it was near their bed but I was wrong, so wrong... it is found. It was in my housemate's bag. So my recollection of events was: 1: get to friend's place, extract headphones from ears 2: turn off iPod, tuck in my bag 3: toss my bag and housemate's bag on friends' bed 4: walk out door to street fair 5: come back from street fair, find my bag and housemate's at the foot of friends' bed 6: go home, do not find iPod in my bag. Flip out.
I'm guessing that between 4 and 5, we have: 4.1: _____ picks my bag and housemate's bag up from bed; my iPod falls out of my bag. _____ looks at iPod, doesn't know which bag it fell out of, and tucks it into housemate's bag. (leaving whomever-it-was' name as a blank because I dunno who the heck it was).