Original post by: Andrew Bookholt ,
It is a good thing to have in there. Basically, it reflects light from the backlight out toward the LCD and away from the inside of the iPod. Additionally, it'll give the display a uniform appearance when you look at it in direct sunlight. If that mylar isn't in there, you'll see some cutouts and screw holes on the metal midplane as the LCD and its backlight are pretty transparent when viewed in a bright enough light.