In Aus I'm pretty sure that all politicians, including our Prime Minister, aren't allowed to accept personal gifts above a (small) given price range. Or rather, when they receive a gift of any value over that small value, it's publicly listed, and either cataloged and sent to a museum of some type, or sold and the monies go to general tax revenue.
It's a corruption prevention measure.
Therefore knowing that price limit, and giving a very small gift like a CD that he would be allowed to accept personally and keep, would be the thoughtful thing to do.
I do not know what was ON the iPod Obama gave the Queen. That could be a very interesting question if there was anything at all. She is a woman who values knowledge amazingly. Or perhaps it could just have a favourite song list. Which is a very personal and friendly thing to do, swapping song lists, and therefor is not out of place as a friendly diplomatic touch.
Lastly, right now the public is especially watching out for actions of frugality or extravagance in government spending, all over the world.